David Chatman, 51, is filing for bankruptcy.
One reason? His monthly student loan payments are projected to jump from $86 to $689 now that President Donald Trump has moved to end the income-driven repayment plan Chatman was on.
The SAVE plan, created under former President Joe Biden, was intended to provide borrowers with cheaper monthly payments and a shorter timeline to debt relief. In early December, President Donald Trump’s administration announced a proposed settlement to officially eliminate the plan.
“I’ve never been behind on a credit card payment. I’ve never missed a student loan payment. But now it’s come to the point where life just isn’t feasible like that,” Chatman told Business Insider. He described his decision to pursue bankruptcy as “the lesser of all the evils out there.”
The fate of the SAVE plan has been uncertain for over a year. After a group of GOP-led states filed a lawsuit to block the plan, over 7 million enrolled borrowers were placed on forbearance in the summer of 2024. Trump’s Department of Education restarted interest charges on SAVE accounts in August, and if a court approves the department’s proposed settlement, enrolled borrowers will have a limited period to enroll in a different repayment plan, likely facing higher monthly payments.
Nicholas Kent, the undersecretary of education, said in a statement on the proposed SAVE settlement that “if you take out a loan, you must pay it back.”
“American taxpayers can now rest assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies,” Kent said.
Chatman doesn’t see it that way. He has consistently made monthly payments since 2015, when he graduated from Oregon State University with a bachelor’s degree in microbiology with $63,000 in student-debt. Now, however, he doesn’t have hundreds of extra dollars to keep that up without the SAVE plan while earning an hourly wage at a car dealership. Bankruptcy would allow him to clear some of his debt and move forward financially.
“When I saw that my payment was going to be this much more, I just sat there and looked at it,” Chatman said. “There’s no way. There’s no way.”
‘It has to be something I can afford’
Like Chatman, Brenda McCoy is considering bankruptcy if her payments surge once she’s off the SAVE plan.
McCoy, 60, decided to advance her career and boost her income by returning to school to earn her master’s degree in social work, which she completed in 2018. She took out about $55,000 in student loans, which she was paying off until the pandemic forbearance. She enrolled in the SAVE plan when it became available, and she said her payments were around $480. Without SAVE, she expects monthly payments of over $1,000.
“I’m bracing for an astronomical bill,” McCoy told Business Insider. “My goal was to be self-sufficient. I was making the payments, I was being a responsible person, but it has to be something I can afford.”
The Department of Education recommended that SAVE borrowers enroll in an income-based repayment plan. IBR plans give borrowers monthly payments based on their incomes, with forgiveness after 20 or 25 years, depending on when they first took out the loan.
The department has been updating the IBR plan to align with changes Trump signed into law in his “big beautiful” spending legislation, which includes removing the partial financial hardship requirement to enroll. It means that borrowers with higher incomes would be eligible for IBR, and the department said it plans to complete this update in December.
Additionally, the department is working to implement its new Repayment Assistance Plan, which is set to roll out in July 2026. The plan would set borrowers’ payments at 1% to 10% of their income, depending on their income levels, and any remaining balance would be forgiven after 30 years.
It’s less generous than the SAVE plan, and some education policy experts said borrowers on SAVE should anticipate higher monthly payments.
“The SAVE plan had created a meaningful pathway for low- and middle-income people to move toward paying off their student loans while making affordable monthly payments,” Abby Shafroth, managing director of advocacy at the National Consumer Law Center, said. “Now, in the midst of a national affordability crisis, their way forward is murky and complicated.”
If the court approves the department’s proposed settlement, borrowers on the SAVE plan will receive more information from their servicers on the next steps.
Jennifer Oakes, 41, said higher prices on her groceries, along with her house and car payments, have strained her budget, and she doesn’t know how she’ll afford losing her $0 monthly payments that she received on the SAVE plan.
“My overall general feeling is anxiety and nervousness about it because we really don’t know what’s going to happen,” Oakes said. “I used to feel very comfortable that the government was always looking out for us and would make sure that we weren’t screwed over. The overall feeling, as of recently, is the complete opposite of that.”
