Entrance to the U.S. Department of Education headquarters building in Washington, June 20, 2025.
J. David Ake | Getty Images News | Getty Images
A federal judge on Friday rejected the Trump administration’s request to end a student loan repayment plan that lowers monthly bills for millions of borrowers.
Judge John Ross of the United States District Court for the Eastern District of Missouri issued an order dismissing a multi-state lawsuit blocking the creation of the federal student loan repayment plan Savings for Valuable Education (SAVE).
Consumer advocates said the Trump administration’s failed attempt to block the SAVE plan means borrowers should be able to benefit from the program, at least for now. These include lower monthly payments and a faster timeline for forgiveness.
“At this time, not only is there no legal barrier to granting these rights through the SAVE scheme, but the Commissioner has a legal obligation to do so,” Protect Borrowers legal director Winston Berkman-Breen said.
The Department of Education did not respond to requests for comment.
More than 7 million student loan borrowers remained enrolled in SAVE plans as of the fourth quarter, according to the 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.
The court order could provide a temporary reprieve, but it’s unclear how the Trump administration will respond. President Donald Trump’s “Big and Beautiful Act” would phase out the SAVE plan on July 1, 2028.
How the SAVE plan works
The Biden administration introduced the SAVE Plan in 2023, touting the program as “the most affordable repayment plan ever created.” But just as many of the SAVE plan’s benefits began to take effect, a Republican-led legal challenge put the plan on hold.
One of the features of SAVE is its faster timeline for forgiveness compared to other income-driven repayment (IDR) plans, which typically offer forgiveness after 20 to 25 years.
Under the SAVE plan, borrowers with an original loan amount of $12,000 or less are eligible for loan forgiveness after 10 years of consistent monthly payments. Every additional $1,000 you borrow beyond this amount increases your repayment period by one year. Up to 20 years for undergraduate loans and 25 years for graduate loans.
For example, an undergraduate borrower with a starting balance of $15,000 would have to make payments on SAVE for 13 years to qualify for loan forgiveness.
Another advantage of SAVE was that it had lower payments compared to other IDR plans.
SAVE monthly payments were initially capped at 10% of discretionary income, but will be reduced to 5% of discretionary income in 2024. Borrowers with incomes at or below the federal poverty level will have a monthly payment of $0.
SAVE plans also include interest caps. Interest that accrues in excess of the borrower’s monthly payment amount is waived.
For example, if your loan accumulates $50 in interest in a month, but your payment is only $30, you won’t be charged the additional $20. Borrowers who qualify for $0 monthly payments will not pay any additional interest on their debt.
