The U.S. Department of Education headquarters is seen on March 06, 2025 in Washington, DC.
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A federal appeals court has ordered the end of the Saving on a Valuable Education, or SAVE, plan, the Biden administration-era repayment program that brought lower monthly bills to millions of student loan borrowers.
In a judgment issued late Monday, the U.S. Court of Appeals for the 8th Circuit reversed a lower court’s dismissal of a Republican-led legal challenge against SAVE.
The panel of 8th Circuit judges overturned a February decision by Judge John Ross of the U.S. District Court for the Eastern District of Missouri.
The Biden administration introduced SAVE in 2023, billing it as “the most affordable repayment plan ever created.” Under the program, many borrowers expected to see their monthly bills cut in half. But Republican-led legal challenges quickly put the plan on ice.
Consumer advocates and borrowers had hoped that last month’s judgment meant the program would be temporarily revived. President Donald Trump’s “big beautiful bill” phases out the SAVE plan as of July 1, 2028.
More than 7 million student loan borrowers remain enrolled in the SAVE plan as of the fourth quarter, according to the U.S. Department of Education. Those borrowers were placed in forbearance during the legal challenges, meaning they didn’t owe monthly payments. Their loans have been accruing interest since August.
“In the coming weeks, the Department will issue clear guidance on next steps for borrowers enrolled in the illegal SAVE Plan, including details regarding how borrowers can move into a legal repayment plan,” Undersecretary of Education Nicholas Kent said in a statement.
Student loan borrowers in SAVE should immediately file an Income-Driven Repayment Plan Request form and switch into a new plan, said higher education expert Mark Kantrowitz.
The best repayment for most borrowers at the moment will be IBR, or the Income-Based Repayment plan, he said. Any borrowers pursuing Public Service Loan Forgiveness should file a PSLF Buyback application to get credit for the months their progress stalled in SAVE.
The U.S. Department of Education did not immediately respond to a request for comment.
‘A labyrinth with no clear exit’
On Monday, four borrowers represented by Public Goods Practice LLP, filed a lawsuit against the Department of Education, arguing the agency is compelled to immediately implement the SAVE plan. They say the department’s refusal to enact the SAVE plan and provide lower payments and loan discharge to eligible borrowers violates federal administrative law.
The lawsuit was filed just hours before the 8th Circuit court’s decision to reverse the earlier dismissal.
One of the plaintiffs, Elizabeth Robeson from South Carolina, said in the suit that she borrowed $12,000 in student loans during the 1980s, when she attended the University of Mississippi. She made more than 100 monthly payments beyond the 216 required for her to earn debt forgiveness under SAVE, but today her balance has swelled to $93,000.
“I have never been out of compliance on this loan and have paid for decades,” Robeson said in the suit. “The student loan crisis has cruelly forced millions of working Americans like me to live in a labyrinth with no clear exit despite our having followed the law.”
Student loan bills to jump
The One Big Beautiful Bill Act’s overhaul to the student loan system is likely to make it harder for people to afford their payments, consumer advocates say. The law phases out several affordable repayment plans and lengthens terms for others.
The median U.S. household, with a family of four and an income of $81,000, could see its monthly bill surge to $440 from $36 due to the legislative changes, according to the Institute for College Access & Success, a nonprofit organization that promotes college affordability.
More than 42 million Americans hold student loans, and the outstanding debt exceeds $1.6 trillion, according to the Congressional Research Service.
