Student loan borrowers in limbo after courts halt SAVE plan

The dueling court cases seeking to overturn the Save repayment plan are creating a harmful ripple effect throughout the federal student loan system.

Millions of student loan borrowers are in limbo after the Supreme Court upheld a block on President Joe Biden’s SAVE (Saving on a Valuable Education) plan, which promised lower monthly payments and a faster path to loan forgiveness for about 8 million enrollees. The plan will remain on hold until the 8th US Circuit Court of Appeals decides on its legality, which could take weeks or longer, leaving borrowers uncertain about their future payment obligations.

In response to the ongoing legal battle, the Department of Education has paused payments for all borrowers enrolled in SAVE. The Supreme Court’s ruling adds to the confusion as it remains unclear whether the block affects other repayment plans or debt relief options. The situation is particularly pressing on borrowers as the pandemic-era freeze on defaulted student debt collections is set to end on October 1.

The legal struggle began earlier this year with two lawsuits from Republican-led states and is now awaiting a ruling from the St. Louis-based 8th Circuit Court, which is predominantly composed of judges appointed by Republican presidents.

NOTE: Borrowers should be prepared for potential changes in their repayment plans and monitor updates closely as the legal proceedings continue at StudentAid.Gov