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A federal appeals court on Monday officially finalized the termination of the Saving on a Valuable Education (SAVE) plan, the Biden program that significantly reduced repayment rates for millions of student loan borrowers.
The ruling, issued by the U.S. Court of Appeals for the 8th Circuit, reverses a lower court’s February dismissal of a Republican-led legal challenge to the SAVE plan. That ruling was made by Judge John Ross of the U.S. District Court for the Eastern District of Missouri.
Originally introduced in 2023 under former president Joe Bidenthe SAVE plan was hailed as the “most affordable repayment plan ever created” for federal student loan borrowers. The program was the first and only plan in history to prevent the balance from ever growing by subsidizing 100% of all unpaid monthly interest.
More than 7 million student loan borrowers are reported to remain enrolled in the SAVE plan as of the fourth quarter.
THE TRUMP ADMINISTRATION DELIVERS THE FINAL BLOW TO END BIDEN’S SAVE STUDENT LOAN PROGRAM
President Joe Biden speaks at the Pieper-Hillside Boys & Girls Club in Milwaukee, Wisconsin, on March 13, 2024. (Alex Wroblewski for The Washington Post via Getty Images) / Getty Images)
Student loan borrowers enrolled in the SAVE plan have been urged to explore switching to a new repayment program.
One of the alternative options is the Income-Based Repayment Plan (IBR), where monthly payments are set at 10% to 15% of discretionary income over a period of 20 to 25 years.
THE TRUMP ADMINISTRATION AGREES TO FORGIVE STUDENT LOANS UNDER NEW LEGAL AGREEMENT
Student loan borrowers are urged to seek alternative repayment plans after Monday’s decision. (iStock / iStock)
Under the Big Beautiful Bill Act (OBBBA), which was passed last year President Donald Trumpthe Repayment Assistance Plan (RAP) will be available beginning July 1, 2026. RAP uses a sliding scale of 1% to 10% of a borrower’s total adjusted gross income (AGI) and requires 30 years of payments for all participants.
Borrowers pursuing Public Service Loan Forgiveness (PSLF), a federal program that forgives remaining student debt after ten years of qualifying public service, must verify their eligibility and apply to recover credit for the months in which progress on their SAVE plan was effectively frozen.
Secretary of Education Linda McMahon gives a speech in front of the American flag. (Darren McColester/Getty Images)
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Monday’s decision effectively resolved a years-long legal battle between Republican-led states and the federal government. The ruling comes after nearly 8 million borrowers suspended their payments on “litigation forbearance” following an earlier order, and follows a brief period of confusion when a lower court tried to dismiss the case following a settlement with the Trump administration.
