The SAVE plan forgiveness lawsuit ended in March 2026, when the U.S. Court of Appeals for the Eighth Circuit issued a two-sentence order that permanently shut down the Saving on a Valuable Education repayment program.1Politico Pro. Appeals Court Kills Biden-Era Student Loan Repayment Plan Republican-led states had sued the Biden administration in 2024, arguing the Department of Education had no authority to forgive loans through an income-driven repayment plan. The courts agreed. About 7 million borrowers who had enrolled in SAVE are now being moved off the plan and told to pick a new one, and most will pay more each month than they would have under SAVE.2CNBC. Student Loan Borrowers SAVE Plan
Who Sued and Why
Two coalitions of states filed federal lawsuits in the spring of 2024. The lead case, State of Missouri v. Biden, was filed April 9, 2024, in the Eastern District of Missouri by Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma.3Civil Rights Litigation Clearinghouse. Missouri v. Biden A parallel Kansas-led suit brought in 11 more states, for 18 in all.4Protect Borrowers. Missouri and Kansas Judges Temporarily Halt Borrowers’ Access to Lower Student Loan Payments, Debt Relief
The core dispute was narrow: could the Secretary of Education design an income-driven plan that functioned, in practice, as mass loan forgiveness? The Biden administration said yes, pointing to its longstanding authority under the Higher Education Act to set the terms of income-contingent repayment plans, and noting it had followed full notice-and-comment rulemaking.5Boston University Review of Banking and Financial Law. SAVE Plan Legal Analysis The states pointed to a different section of the same law — the income-based repayment statute — where Congress had expressly told the Secretary to “repay or cancel any outstanding balance.” That express language, they argued, was missing from the income-contingent section for a reason.6American Enterprise Institute. The SAVE Loan Cancellation Plan Is Almost Dead
What the Courts Decided
By late June 2024, federal judges in both Kansas and Missouri had issued preliminary injunctions blocking key parts of SAVE. The overlapping orders left the Department unable to bill SAVE borrowers at any lawful rate, so servicers placed everyone into a general forbearance.7Federal Student Aid. IDR Court Actions
On February 18, 2025, an Eighth Circuit panel ruled on the merits. The court held that the word “repayment” in the statute implies the borrower actually repays the loan, and that the Secretary had “gone well beyond” the statute “by designing a plan where loans are largely forgiven rather than repaid.” The Department had argued it had been including forgiveness in income-contingent plans since 1994. The court’s response: “the agency’s consistently wrong interpretation cannot rewrite the statute’s text.” The panel also expanded the injunction, sending the case back with instructions to block the entire SAVE rule.8U.S. Court of Appeals for the Eighth Circuit. State of Missouri v. Trump, No. 24-2332
The Trump administration, which took office in January 2025, had no interest in defending the plan. On December 9, 2025, the Department of Education announced a proposed settlement with the plaintiff states. Its terms: no new SAVE enrollments, all pending applications denied, existing borrowers moved off, no forgiveness under SAVE or the older REPAYE plan, and formal rulemaking to strip SAVE from the regulations. The Department also agreed to give Missouri’s attorney general 30 days’ notice before any month in which it planned to forgive more than $10 billion in student loans, a reporting obligation lasting 10 years.9U.S. Department of Education. Missouri Settlement Agreement
One provision of the original SAVE rule survived: time spent in certain deferments and forbearances still counts as progress toward forgiveness under other plans.9U.S. Department of Education. Missouri Settlement Agreement The Eighth Circuit’s March 9, 2026 order made the settlement’s terms binding and closed the case for good.10Forbes. Student Loans Thrown Into Disarray as Appeals Court Nukes SAVE Plan
What the Forbearance Cost Borrowers
More than 7 million people were placed into a general forbearance beginning in the summer of 2024.11PBS NewsHour. Biden’s SAVE Plan for Student Loans Is Officially Dead. Here’s What Experts Suggest Now No payments were required, but the months did not count toward income-driven repayment forgiveness or, in most cases, Public Service Loan Forgiveness.12NerdWallet. SAVE Plan Lawsuits
Interest was initially frozen. Accrual resumed in August 2025. The Department later clarified that interest would not be assessed retroactively for the frozen period, but borrowers remain responsible for interest accruing going forward once payments resume.13U.S. Department of Education. U.S. Department of Education Continues to Improve Federal Student Loan Repayment Options For PSLF borrowers, months spent in the SAVE forbearance can be recovered through the “buyback” option, which lets you pay retroactively for missed qualifying months.14Free Student Loan Advice. SAVE Litigation Updates and FAQ
What SAVE Borrowers Have to Do Now
You have to move. Undersecretary of Education Nicholas Kent said in June 2026 that “SAVE borrowers have to move,” warning that anyone who stays is making no progress toward forgiveness and risks accumulating debt or defaulting.2CNBC. Student Loan Borrowers SAVE Plan
The Department is staggering notifications through the summer of 2026 to avoid overwhelming loan servicers. Borrowers who have been on SAVE longest will hear first, with a new group notified every two weeks. Once you get your notice, you have a 90-day window to choose a new plan. If you don’t pick one, you’ll be placed automatically into either the Standard Repayment Plan or a new Tiered Standard Plan.15U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in Unlawful SAVE Plan As of early June 2026, about 300,000 borrowers had already left SAVE on their own; nearly 7 million had not.2CNBC. Student Loan Borrowers SAVE Plan
Your Replacement Options
Four alternatives are available, and they fall into two groups: older plans that still exist and new ones created by the One Big Beautiful Bill Act (OBBBA).
- Income-Based Repayment (IBR). The only income-driven plan Congress created by statute, and the only one whose forgiveness provision survived the litigation. The Department resumed processing IBR discharges in September 2025.7Federal Student Aid. IDR Court Actions
- Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE). Both remain available through June 30, 2028. The Department has updated its systems to process discharges under each.7Federal Student Aid. IDR Court Actions
- Repayment Assistance Plan (RAP). A new income-based plan launching July 1, 2026 under the OBBBA. Payments run from 1% to 10% of adjusted gross income with a $10 minimum, so $0 payments are no longer available. Forgiveness comes after 30 years, and any forgiven balance is taxable.16PHEAA. How OBBBA Impacts Student Loans – Repayment and Forgiveness
- Tiered Standard Plan. Also new as of July 1, 2026, with fixed terms of 10, 15, 20, or 25 years based on your total balance.15U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in Unlawful SAVE Plan
Expect a higher payment than SAVE offered. The most generous of the remaining income-driven plans calculates payments at 10% of discretionary income at minimum, double the 5% rate SAVE applied to undergraduate loans.2CNBC. Student Loan Borrowers SAVE Plan
After July 1, 2028, the choices narrow again. The OBBBA sunsets ICR and PAYE, and IBR remains available only for loans disbursed before July 1, 2026. Newer borrowers will have RAP as their only income-based option.17NerdWallet. Trump Student Loans
What About PSLF and Payments You Already Made
Payments made under SAVE and the earlier REPAYE plan still count toward the 120 qualifying payments required for Public Service Loan Forgiveness. The months spent in the SAVE forbearance do not count, but the buyback option lets you pay retroactively to recover them.14Free Student Loan Advice. SAVE Litigation Updates and FAQ Under the Missouri settlement, time in certain deferments and forbearances continues to count toward forgiveness on other plans as well. What you will not receive is any forgiveness under the SAVE or REPAYE rules themselves; the settlement expressly bars it.9U.S. Department of Education. Missouri Settlement Agreement
A separate lawsuit, Havens v. U.S. Department of Education, was filed on March 9, 2026 by four borrowers seeking to force the Department to implement the SAVE rule anyway.18Student Debt Crisis Center. Lawsuit Seeks to Force Department of Education to Implement SAVE Student Loan Plan The Department of Justice responded that the borrowers waited too long to intervene, and the case remains pending as of mid-2026.19Debt Collective. SAVE Plan Rapid Response Update Until that suit produces a different outcome, the 90-day clock that starts when your notice arrives is the timeline that governs your account.