Kamal Ghorui
A federal appeals court in the US has ordered the end of the Saving on a Valuable Education (SAVE) plan, a repayment programme introduced during the Biden administration that was used by millions of student loan borrowers. The ruling comes after a Republican-led legal challenge and reverses an earlier dismissal by a lower court.The judgment, issued late on Monday by the US Court of Appeals for the Eighth Circuit, overturns a previous decision by Judge John Ross of the US District Court for the Eastern District of Missouri. According to CNBC, the ruling marks the latest development in a series of legal battles that have created uncertainty for borrowers enrolled in the programme.Court reverses earlier dismissal of legal challengeThe Biden administration launched the SAVE plan in 2023, describing it as “the most affordable repayment plan ever created”. The initiative aimed to significantly reduce monthly student loan payments, with many borrowers expecting their bills to be cut roughly in half.However, the plan faced immediate legal challenges from Republican-led states, which led to its implementation being paused. CNBC reported that consumer advocates and borrowers had hoped a recent judgment might temporarily revive the programme before the appeals court decision halted it again.President Donald Trump’s One Big Beautiful Bill Act also includes provisions to phase out the SAVE plan by July 1, 2028.Millions remain enrolled in SAVEMore than 7 million borrowers were still enrolled in the SAVE programme as of the fourth quarter, according to data from the US Department of Education cited by CNBC. During the legal disputes, these borrowers were placed in forbearance, meaning they were not required to make monthly payments. Their loans, however, have continued to accrue 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.Higher education expert Mark Kantrowitz advised borrowers in SAVE to immediately submit an Income-Driven Repayment Plan Request form and transition to another programme. He said the Income-Based Repayment (IBR) plan is currently the most suitable option for many borrowers.Borrowers file lawsuit as payments expected to riseSeparately, four borrowers represented by Public Goods Practice, LLP, filed a lawsuit against the Department of Education seeking immediate implementation of the SAVE plan. The plaintiffs argue the agency’s refusal to enact the programme violates federal administrative law.One plaintiff, Elizabeth Robeson of South Carolina, said she borrowed $12,000 in the 1980s while attending the University of Mississippi but now owes $93,000 despite making more than 100 additional payments beyond the required 216 for forgiveness under SAVE.“I have never been out of compliance on this loan and have paid for decades,” Robeson said in the lawsuit, adding that borrowers face “a labyrinth with no clear exit”.More than 42 million Americans hold student loan debt exceeding $1.6 trillion, according to the Congressional Research Service. CNBC also reported that policy changes under the new law could push the median household’s monthly student loan bill to $440 from $36, based on estimates by the Institute for College Access & Success.
