Court Ruling Signals Death of SAVE Plan

The 8th U.S. Circuit Court of Appeals has issued a probable deathblow to the embattled SAVE Repayment Plan. The decision, issued Feb. 18, 2025, found the Department of Education (ED) exceeded its authority when it created SAVE. The Trump administration signaled approval of the ruling, meaning ED is unlikely to challenge it.

In the decision, the court found repayment plans offering forgiveness essentially transformed loans into grants. The judges ruled that because this power was not specifically granted to ED by Congress, it represented an overreach.

The court also barred ED from processing time-based forgiveness for Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans.

Immediate Impact

ED is no longer accepting applications for the SAVE Plan. Borrowers who were on the plan before July 2024 will remain in forbearance for the foreseeable future.

In addition, the online income-driven repayment (IDR) application on StudentAid.gov has been taken offline. The PDF version of the form has also been removed from the site. As of Feb. 27, 2025 there is no way to apply for an IDR plan.

Steps to Take Now

Start by securing your legitimate communication channels. Any official instructions or updates will come from ED or your loan servicer. Log in to StudentAid.gov and update your contact information. Do the same for your loan servicer account. If you don’t know who your servicer is, follow these instructions. Keeping your contact information current ensures you won’t miss vital messages.

Next, watch out for scams. Scammers will take advantage of the current confusion to target student loan borrowers. You should only trust information from ED, your servicer, your former school, and representatives of your school. Read this article to learn more about avoiding scams.

Finally, beware of disinformation. People online can make up whatever rumors they want. Check their “facts” against trusted sources like ED or your loan servicer.

Don’t Wait to Get Help!

If you’re having trouble keeping up with your loans, don’t wait to take action. The courts spent more than six months resolving the case against SAVE. You don’t have that kind of time! Penalties kick in just 90 days after your first missed payment.

Student loan repayment options are a mess right now, but there are still ways to pause or lower your monthly payments.

You can also contact Student Connections to speak with one of our Borrower Advocates. They’ll listen to your problems and direct you to an ideal solution.

Uncertain Future

There are more than 8 million borrowers on the SAVE Plan. ED will have to move them (and possibly borrowers on other IDR plans) to a different repayment plan. How they’ll do that is unclear.

The 8th Circuit’s decision has largely tied ED’s hands. The department may fall back on legacy repayment plans or try to revise existing IDR plans within the limitations imposed by the ruling. They could also wait for Congress to act.

That last option isn’t out of the question. Congress is ultimately responsible for setting the terms of student loan repayment. It’s a role lawmakers have ceded to ED for over a decade, but the court’s ruling may force them to take direct action.

How this will play out is anyone’s guess, but a quick resolution is unlikely. Borrowers currently on an IDR plan or seeking lower monthly payments will need to stay actively engaged with the issue. Expect to pass through more stages of limbo before we reach a new status quo.