ST. LOUIS — A federal appeals court has ruled that the Biden administration’s Saving on a Valuable Education (SAVE) plan for student loan borrowers cannot move forward, effectively ending a program that lowered repayment amounts for millions of Americans.
In a decision issued by the U.S. Court of Appeals for the 8th Circuit, the court reversed a February ruling from the U.S. District Court for the Eastern District of Missouri that had dismissed a lawsuit challenging the program. The lower court decision had been issued by John Ross.
The appellate ruling allows a Republican-led legal challenge to proceed and blocks implementation of the SAVE plan, which had been introduced under former President Joe Biden as part of a broader effort to reduce student loan burdens.
Designed to Cut Payments
The SAVE plan — short for Saving on a Valuable Education — was designed to cut monthly payments for many federal student loan borrowers by tying required payments more closely to income. The program also expanded income exemptions and offered faster loan forgiveness timelines for some borrowers.
Administration officials had argued the plan would significantly reduce repayment costs for millions of borrowers while preventing loan balances from growing due to interest. Critics, including several Republican-led states that filed the lawsuit, argued the administration exceeded its authority by effectively rewriting repayment rules without congressional approval.
The case centered on whether the U.S. Department of Education had the legal authority under federal law to create such sweeping changes to income-driven repayment programs.
Judge Ross had dismissed the challenge in February, finding the states lacked standing to sue. But the 8th Circuit disagreed, reinstating the case and allowing the challenge to move forward, a decision that effectively halts the SAVE program.
Latest Legal Setback
Analysts noted the ruling represents the latest legal setback for the administration’s efforts to reduce student loan repayment obligations through executive action.
The SAVE plan had been expected to benefit millions of borrowers by lowering required payments and expanding eligibility for reduced repayment schedules.
With the appellate court’s decision, the program cannot proceed unless Congress enacts legislation authorizing similar repayment changes or a higher court overturns the ruling.
