- A federal court blocked Biden's SAVE student-loan repayment plan.
- This means borrowers enrolled in the plan cannnot access the lower payments and shorter timelines for debt relief.
- The case is sent back to district courts and borrowers are expected to remain on forbearance.
Former President Joe Biden's key student-loan repayment plan is blocked without an end in sight, preventing millions of borrowers from accessing cheaper payments and a shorter timeline for loan forgiveness.
On Tuesday, the 8th Circuit Court of Appeals ruled that Biden's SAVE income-driven repayment plan is an overreach of authority and upheld a preliminary injunction on the plan. SAVE will remain blocked as a district court continues to work on the case.
The SAVE plan, first introduced in the summer of 2023, has been on pause since a group of GOP-led states filed lawsuits to block it in July 2024, leaving 8 million enrolled borrowers in limbo.
The 8th Circuit's ruling said the court was "hard-pressed" to find that Congress would approve a repayment plan that would wipe out borrowers' balances after as few as 10 years of payments, which the SAVE plan would have allowed for.
The ruling also suggested that other student-loan repayment plans, including income-contingent repayment, are not permissible under the Higher Education Act.
With SAVE remaining blocked, it's unclear when borrowers on the plan will be taken out of forbearance and expected to make payments again, Education Department guidance last updated on January 17 said borrowers enrolled in SAVE will not be expected to make payments until December "at the earliest." The Education Department did not immediately respond to a request for comment from BI on the payment timeline.
Republican lawmakers have criticized the SAVE plan and have called its relief provisions an overreach of the Education Department's authority. President Donald Trump is unlikely to move forward with a similar plan; during his first term, his Education Department did not prioritize broader debt relief, and Trump lauded the Supreme Court's June 2023 decision that struck down Biden's first attempt and broad loan forgiveness.
Republican control over Congress and the White House means that some existing legislation related to student debt would have more success being signed into law; the GOP-led College Cost Reduction Act proposed streamlining repayment plans and boosting transparency in college pricing to reduce debt.
Still, some student-loan borrowers previously told Business Insider that the SAVE plan was a significant financial relief for them, and they're not sure how they will afford higher payments without the plan. Malissa Williams, a 40-year-old borrower, said that she expects her payments to surge without SAVE.
"When I looked at what my payments could be, it was back up to almost a thousand dollars a month, and that would be a significant blow that would put my student loan payment almost at what my mortgage is," she said.
Are you enrolled in the SAVE plan? How is the uncertainty with the plan impacting you? Share your story with this reporter at [email protected].
