A federal judge has dismissed a lawsuit challenging the Biden-era Saving on a Valuable Education (SAVE) student loan repayment plan, declining to rule on whether the program itself is lawful.
The case, brought by Missouri and other Republican-led states, argued that the U.S. Department of Education exceeded its authority under the Higher Education Act when it created and expanded the SAVE income-driven repayment plan. The program lowered monthly payments for many borrowers and offered accelerated forgiveness timelines for some.
Many consumer rights activists are counting this as a win.
Nadine Chabrier, senior policy counsel at the Center for Responsible Lending, said in a statement, “This decision is a significant victory for millions of low-income borrowers who have endured years of uncertainty and unnecessary delay.”
“At a time when families are struggling to afford housing, food and other basic necessities, eliminating SAVE would have pushed vulnerable borrowers into an unmanageable cycle of debt,” she continued. “This ruling prevents an abrupt and devastating spike in monthly student loan bills and makes clear that borrowers’ rights cannot be undone through procedural shortcuts or closed-door agreements.”
But the ruling isn’t decidedly a victory for borrowers who had previously enrolled in the program. Rather than issuing a decision on the merits, the court dismissed the case as moot after Missouri and the Trump administration jointly moved for final judgment, signaling they no longer had an active dispute requiring resolution. This means that the legal status of SAVE remains unresolved and borrowers are left to navigate a complicated landscape.
Borrowers rights advocates say the U.S. Department of Education has a responsibility to move urgently to provide relief to borrowers caught in limbo.
“For almost two years, borrowers in the SAVE plan have been denied their legal rights to lower payments and to debt cancellation,” said Protect Borrowers Legal Director Winston Berkman-Breen in a statement.
“With this dismissal, there is no longer any legal basis for the Department to withhold borrowers' rights under the SAVE plan,” added Project Borrowers Policy Director Aissa Canchola Banez. “This includes more affordable payments and, in some instances, having their loans cancelled. We call on the Department to ensure that borrowers who have earned SAVE cancellation get this relief and that borrowers who are entitled to more affordable payments get them.”
But there is no indication the Department will move forward with the income-driven payment structure that is at the center of the SAVE program. In fact, as part of its proposed settlement in the case, the U.S. Department of Education has said it will not enroll any new borrowers in the program, will deny any pending SAVE applications, and move all SAVE borrowers into other repayment plans. According to the Department, the One Big Beautiful Bill Act (OBBBA) now allows borrowers who don’t meet the minimum threshold of partial financial hardship to enroll in an alternative Income-Based Repayment (IBR) Plan. Though the judge refused to approve the settlement plan, a dismissal leaves the program’s implementation at the discretion of the Department.
For borrowers, that means the injunction tied to the lawsuit is no longer in effect and the U.S. Department of Education is not legally barred by this case from moving forward. The legal fight paused implementation and placed millions into administrative forbearance. The dismissal removes one layer of litigation, but it does not settle the broader debate over how far the executive branch can go in redesigning student loan repayment programs, and Congress has already moved to phase out SAVE by 2028 and further regulatory or legislative changes could still reshape repayment options.
Abby Shafroth, managing director of advocacy at the National Consumer Law Center, wrote in a statement that there is still an opportunity for the U.S. Department of Education to leverage its rulemaking authority to help Americans and positively impact the economy, “The court has given the Department a golden opportunity to do right by people struggling with the staggering cost of living and crippling student loan debt,” she said.
