What Will Change for SAVE Borrowers After a Federal Court Ruled Against Biden’s Relief Program

Millions of student loan borrowers enrolled in the Saving on a Valuable Education (SAVE) plan have their forgiveness in limbo after federal judges blocked the program on Friday, marking the latest in a series of court battles against President Joe Biden’s student loan cancellation efforts.

The Eighth Circuit of Appeals’ preliminary injunction comes just weeks after a separate federal court issued a stay on the income-driven repayment plan. Under SAVE, borrowers with a principal balance of $12,000 or less in loans and who made 10 years of monthly payments were set to receive loan forgiveness, while people who owed more than that would see similar relief after 20-25 years. The program was also dubbed the most “affordable student loan repayment plan,” with payment plans based on income and family size as low as $0 a month. 

The ruling, made by Republican-appointed judges, says that borrowers who already received forgiveness under the program will not have to retroactively pay back their loans. But, they argue that the program is illegal, and “broader” than any other repayment plan enacted by the Education Department, per the ruling.  

U.S. Secretary of Education Miguel Cardona said the Biden Administration “strongly disagreed” with the Eighth Circuit’s decision in a Monday statement. “It’s shameful that politically motivated lawsuits waged by Republican elected officials are once again standing in the way of lower payments for millions of borrowers,” he said. “If allowed to stand, this ruling would force millions of borrowers to pay hundreds of dollars more each month. And the decision’s reasoning could also deny loan forgiveness to individuals who were expecting it after up to 25 years of faithful repayments.” 

The Supreme Court also struck down President Biden’s forgiveness plan in July 2023, preventing some 16 million borrowers from experiencing relief. 

What happens now? 

SAVE borrowers were placed on an interest-free forbearance plan in July—meaning borrowers will not have to make any payments on their loans— due to the previous court ruling that issued a stay on SAVE. “The Department will be providing regular updates to borrowers affected by these rulings in the coming days,” Sec. Cardona said Monday. 

The injunction is set in place until either the Supreme Court or the Eighth Circuit of Appeals orders otherwise, according to the ruling. 

Borrowers interested in SAVE can still apply for enrollment in income-driven repayment plans, including SAVE, though the future of the program will be decided in court. However, the Department of Education says that because of the administrative stay, servicers have temporarily paused processing income-driven repayment plan applications. 

Through other relief efforts, the Biden Administration has approved $169 billion in student loan forgiveness for 4.8 million borrowers.