Federal Appeals Court Terminates Biden's SAVE Student Loan Repayment Plan

The U.S. Court of Appeals for the 8th Circuit has officially terminated the Saving on a Valuable Education (SAVE) plan, a student loan repayment initiative introduced by the Biden administration in 2023. This decision reverses a previous dismissal by Judge John Ross of the U.S. District Court for the Eastern District of Missouri, which had rejected a Republican-led legal challenge against the program. The SAVE plan was designed to significantly reduce monthly payments for borrowers, with many expecting their bills to be cut in half. As of the fourth quarter of 2025, over 7 million borrowers were enrolled in the program, which aimed to prevent loan balances from growing by subsidizing unpaid monthly interest.

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The SAVE plan was touted as "the most affordable repayment plan ever created," but it faced immediate legal challenges from Republican states. The recent ruling effectively resolves a prolonged legal dispute between these states and the federal government, culminating in a decision that places borrowers back into a state of uncertainty regarding their repayment options.

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With the termination of the SAVE plan, borrowers are urged to transition to alternative repayment options. Higher education expert Mark Kantrowitz recommends the Income-Based Repayment (IBR) plan, which sets payments at 10% to 15% of discretionary income over a 20 to 25-year period. Additionally, the Big Beautiful Bill Act, passed under the Trump administration, will introduce the Repayment Assistance Plan (RAP) starting July 1, 2026, which will require payments based on a sliding scale of 1% to 10% of a borrower's Adjusted Gross Income (AGI) over 30 years.

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In response to the court's ruling, four borrowers represented by Public Goods Practice LLP have filed a lawsuit against the Department of Education. They argue that the agency's refusal to implement the SAVE plan violates federal administrative law. One plaintiff, Elizabeth Robeson, shared her experience of borrowing $12,000 in the 1980s, stating that despite making over 100 payments, her balance has ballooned to $93,000. "The student loan crisis has cruelly forced millions of working Americans like me to live in a labyrinth with no clear exit despite our having followed the law," Robeson stated in the lawsuit.

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Undersecretary of Education Nicholas Kent indicated that the Department of Education would soon provide guidance on next steps for borrowers affected by the ruling. He emphasized the need for borrowers to file an Income-Driven Repayment Plan Request form to transition into a legal repayment plan.

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As the Department of Education prepares to issue guidance, borrowers are encouraged to explore their options and file necessary applications for programs like Public Service Loan Forgiveness (PSLF) to reclaim credit for months stalled under the SAVE plan. The legal landscape surrounding student loan repayment continues to evolve, impacting millions of borrowers across the nation.

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