A federal appeals court has ordered the termination of the Saving on a Valuable Education (SAVE) repayment plan, a Biden administration initiative designed to lower student loan payments for millions of borrowers. The U.S. Court of Appeals for the 8th Circuit reversed a lower court decision that had dismissed a Republican-led legal challenge to the program, effectively ending the plan. The SAVE program, launched in 2023 and promoted as the most affordable repayment option for federal student loans, had reduced monthly payments for many borrowers. More than 7 million borrowers were enrolled in the plan before it was halted by ongoing legal challenges. During the court battles, those borrowers were placed in forbearance, meaning they were not required to make payments, though interest has continued to accrue since August. Education Department officials said guidance will soon be issued on how borrowers can transition to other repayment options. Experts recommend that borrowers currently enrolled in SAVE apply for a different income-driven repayment plan, such as Income-Based Repayment (IBR). Those pursuing Public Service Loan Forgiveness may also need to apply to receive credit for months affected by the program’s suspension. The ruling adds further uncertainty to the student loan system as policymakers debate broader reforms. Separate legislation already plans to phase out the SAVE plan by July 2028 while restructuring other repayment programs.
