In the spring of 2024, a federal court issued an injunction preventing the U.S. Department of Education (ED) from fully implementing the Saving on a Valuable Education (SAVE) repayment plan. Since that ruling the program’s fate has remained uncertain, and now that the 8th Circuit Court has affirmed the blockage of SAVE it is unclear whether borrowers will be able to remain in the payment plan.
Following the federal ruling in the spring of 2024, ED was barred from canceling loans eligible for forgiveness under the SAVE, Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans.
By July 2024, the 8th Circuit Court of Appeals blocked the SAVE plan in its entirety which led to borrowers who were able to enroll in the program being placed into an interest-free forbearance, where they have remained since.
On February 18, 2025, the 8th Circuit Court of Appeals issued its long-awaited ruling, siding with the Republican-led states that filed suit against former President Biden’s administration. The court upheld the injunction, continuing to block the SAVE plan in its entirety, including the forgiveness provisions, which subsequently blocked the administration from processing forgiveness for borrowers enrolled in PAYE and ICR plans as well.
Notably, the ruling also directed the lower court to strengthen the injunction, stating that the block on the SAVE plan should be broader. The decision explicitly ordered the lower court to enjoin both the full SAVE plan ruling and what has been referred to as the "hybrid rule."
The hybrid rule was ED's attempt to continue processing time-based forgiveness applications by relying on the forgiveness provisions of the 2015 Revised Pay As You Earn (REPAYE) plan as well as establishing monthly payments for the SAVE plan using the REPAYE plans calculation that used 10% of discretionary income, versus the SAVE plans expected 5%. The 8th Circuit’s recent ruling continues the block for this effort and effectively prevents ED from approving forgiveness applications under both SAVE and REPAYE provisions. ED in late 2024 reestablished the PAYE and ICR plans (which had been sunsetted in the regulations establishing the SAVE plan) so borrowers had additional choices for repayment plans, but debt forgiveness was and remains blocked for these plans as they fall under the same statutory affirming language as the SAVE and REPAYE plans.
It is important to note that Public Service Loan Forgiveness (PSLF) is established separately in statute and is not threatened by legal challenges to the SAVE plan.
The case will now return to the Eastern Missouri lower district court, which is tasked with issuing a final ruling on the fate of the SAVE plan. There has been no public reaction to the ruling of the 8th Circuit Court by the plaintiffs or the Trump administration, so it’s hard to assume what the next steps will be.
NASFAA will be following the case as it continues to the lower court.
About NASFAA
The National Association of Student Financial Aid Administrators (NASFAA) is the only national, nonprofit association with a primary focus on information dissemination, professional development, and legislative and regulatory analysis related to federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended. Our membership consists of more than 29,000 financial aid professionals at nearly 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every 10 undergraduates in the United States.
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