U.S. Department of Education headquarters photographed on March 6, 2025 in Washington, DC.
Chip Somodevilla | Getty Images News | Getty Images
A federal appeals court has ordered an end to the Biden administration-era Savings for a Valuable Education (SAVE) program, a repayment program that lowered monthly bills for millions of student loan borrowers.
In a ruling issued late Monday, the U.S. Court of Appeals for the Eighth Circuit reversed a lower court’s dismissal of a Republican-led legal challenge to SAVE.
A panel of judges in the Eighth Circuit overturned a February ruling by Judge John Ross of the U.S. District Court for the Eastern District of Missouri.
The Biden administration introduced SAVE in 2023, touting it as “the most affordable repayment plan ever created.” Under the program, many borrowers expected their monthly bills to be cut in half. But Republican-led legal challenges quickly put the plan on hold.
Consumer advocates and borrowers had hoped last month’s ruling would temporarily reinstate the program. President Donald Trump’s “Big and Beautiful Act” would phase out the SAVE plan on July 1, 2028.
More than 7 million student loan borrowers remained enrolled in SAVE plans as of the fourth quarter, according to the U.S. Department of Education. Those borrowers were given a stay pending legal challenges. In other words, there was no monthly payment obligation. Their loans have been accruing interest since August.
“In the coming weeks, the department will issue clear guidance to borrowers in illegal SAVE plans on next steps, including details on how borrowers can move to a legal repayment plan,” Education Undersecretary Nicholas Kent said in a statement.
Higher education expert Mark Kantrowitz said SAVE student loan borrowers should immediately submit an income-driven repayment plan application form and switch to the new plan.
He said the best repayment for most borrowers right now would be an IBR, or income-based repayment plan. Borrowers seeking Public Service Loan forgiveness must submit a PSLF repurchase application to receive credit for the months of stalled progress on SAVE.
The U.S. Department of Education did not respond to requests for comment.
“A labyrinth with no visible exit”
On Monday, four borrowers, represented by Public Goods Practice LLP, filed a lawsuit against the Department of Education, saying it must immediately implement the SAVE plan. They argue that the department’s refusal to enact the SAVE plan and provide lower payments and loan forgiveness to eligible borrowers violates federal administrative law.
The lawsuit was filed just hours before the Eighth Circuit decided to reverse an earlier dismissal.
One of the plaintiffs, Elizabeth Robson from South Carolina, said in her lawsuit that she took out $12,000 in student loans while attending the University of Mississippi in the 1980s. She was making more than 100 monthly payments, beyond the 216 required to receive debt forgiveness under SAVE, and her balance has now ballooned to $93,000.
“I have never been in default on this loan and have repaid it for decades,” Robson said in the lawsuit. “The student loan crisis has brutally forced millions of working Americans like me to live in a labyrinth with no clear exit, even though they have been law-abiding.”
Student loan bills skyrocket
Consumer advocates say the One Big Beautiful Bill Act’s overhaul of the student loan system will likely make it harder for people to pay their bills. The legislation phases out some affordable repayment plans and extends the terms of others.
According to the Institute for College Access & Success, a nonprofit organization that promotes college affordability, the median U.S. household of four has an income of $81,000, but the law could cause monthly bills to jump from $36 to $440.
According to the Congressional Research Service, more than 42 million Americans have student loans, totaling more than $1.6 trillion in debt.
