Student loan borrowers were thrown yet another curve ball after a federal judge last week unexpectedly dismissed a key legal challenge to former President Joe Biden’s Saving on a Valuable Education repayment plan, known as SAVE.
The dismissal was a blow to the Trump administration’s plans for student loan reform, which would prefer SAVE out of the picture in favor of the forthcoming Repayment Assistance Plan that was created by President Donald Trump’s marquee policy package, the One Big Beautiful Bill Act.
However, the setback for Trump’s Department of Education doesn’t necessarily translate into a win for the millions of borrowers who are still enrolled in SAVE. According to Betsy Mayotte, the president of The Institute of Student Loan Advisors (TISLA), it’s just a new level of the legal limbo they’ve been in for years.
“This is uncharted territory,” Mayotte says, noting that even though the court dismissed the case against SAVE, she doesn’t expect the Education Department to reimplement the program — at least not “without a fight.”
Where things now stand with SAVE
In 2023, Biden rolled out the SAVE plan, touting it as the most affordable student loan repayment option in history.
The plan set payments based on 5% of borrower’s discretionary income, redefining that term to apply to earnings above 225% of the federal poverty line. In short, this allowed millions of middle- and lower-income borrowers to qualify for smaller payments — often as low as $0 a month — while putting enrollees on a path to loan forgiveness in as few as 10 years.
From the start, SAVE faced swift legal opposition. By June 2024, the plan was effectively paused due to legal challenges. About 8 million borrowers were enrolled by that time, and some 150,000 borrowers had already received loan forgiveness through the new terms of SAVE. Everyone else’s loans were put into a forbearance while the legal battle kicked off.
Then Trump won the election, and his Education Department inherited the lawsuit, which effectively went dormant. In the meantime, the OBBBA officially spelled out the end for SAVE by dissolving the program by July 2028. And in December, the Trump administration proposed to settle the case with the plaintiffs in an agreement that it said would end Biden’s “illegal SAVE plan” once and for all, pending the court’s approval.
What happened next surprised borrowers and loan experts alike. On Feb. 27, instead of ruling on the agreement as was expected, federal court judge John Ross threw out the lawsuit that had frozen SAVE entirely. The plaintiffs quickly filed a request to temporarily halt the decision while it appealed the dismissal, but Ross doubled down on his decision and denied the request on Wednesday.
Ross explained that since the plaintiffs and the Trump administration both oppose the SAVE plan, there is no active controversy, so the lawsuit is — and thus the settlement agreement — is “moot.”
“It is not lost on the Court that millions of borrowers who enrolled in the SAVE plan have patiently awaited clarity while this litigation has proceeded,” Ross wrote in the court order. “However, that clarity must come from the Department of Education, and not from this Court.”
So far, the Education Department has not addressed the dismissal publicly. Education Secretary Linda McMahon and the department’s press team did not respond to Money’s requests for comment. The webpage dedicated to keeping borrower’s updated about the legal challenge has not been updated since December.
In lieu of an official response, Money asked several student loan experts to share their advice. Here’s what else borrowers should know.
1. SAVE is back technically, but curb your enthusiasm
When the federal court released its decision last week, some student loan advocates quickly rejoiced.
“For almost two years, borrowers in the SAVE plan have been denied their legal rights to lower payments and to debt cancellation,” Winston Berkman-Breen, legal director of the advocacy group Protect Borrowers, said in a statement. Now “there is no legal barrier to delivering those rights through the SAVE plan, [and] the Secretary has a legal obligation to do so.”
The group told Money that the dismissal opened a meaningful window for borrowers to potentially get their benefits under the SAVE plan. The rationale is that SAVE is technically back in effect for current borrowers until it formally ends in 2028 — and that the Education Department should honor that.
But not everyone is convinced that will actually happen.
“Anything is possible,” says Adam Minsky, an attorney specializing in student loan policy, but he’s not confident that’s how things will play out.
Minsky says that if the department wants to fight temporarily re-implementing SAVE, it may choose to end the program even sooner than 2028, through the rulemaking process, though that option is complicated and usually takes at least a year.
Mayotte, with TISLA, had similar reservations. Even if the department wanted to restart SAVE (which it doesn’t), she says “these things can’t be turned on and off on a moment’s notice.”
“By the time all of this works its way through,” she adds, “I think we’ll be in 2028 and it will be a moot point anyway.”
2. SAVE can still help some borrowers temporarily
Despite the flurry of legal developments, the SAVE payment pause originally put into place in June 2024 is still in effect for borrowers who are already enrolled in the program.
No new borrowers have been allowed to enroll, and all forgiveness benefits have been halted. But the forbearance — which remains in place today — has at least been able to shield current enrollees from some uncertainty as SAVE weathers legal challenges on its path to inevitable dissolution. It’s not clear if the Education Department has any plans to lift the pause before 2028.
For now, Minsky and Mayotte say that borrowers already enrolled in SAVE who don’t have the room in their budgets to make payments on their loans can stay put and ride things out if they need to.
But that’s a trade-off worth weighing carefully. The debts of borrowers in SAVE right now are growing because interest started accruing again in August 2025. SAVE enrollees are also not getting any credit toward forgiveness through any repayment plan, even if they decide to make payments during the forbearance.
On top of that, Minsky says they should be wary of the coming financial cliff when this temporary forbearance is ultimately lifted.
“Be prepared for higher payments under other repayment plans once the forbearance ends,” he says. “And it will eventually end.”
3. Start looking at other repayment plans
The federal court ruling on SAVE was unexpected — and even exciting — for some. But experts underscore that the Education Department probably isn’t going to start doling out forgiveness benefits between now and 2028.
There are limited cases where staying on SAVE could be beneficial, especially for lower-income borrowers. But SAVE will end. The only question is when: in 2028 as the OBBBA requires? Or will the Education Department try to quash SAVE sooner?
Because of that inevitability, advisors are recommending that SAVE hold-outs start looking into other income-driven repayment options, or IDRs, before they’re forced off.
Income-Based Repayment (IBR)
For folks who want to jump ship before RAP rolls out in July, their main option is Income-Based Repayment, or IBR, which is the one current income-driven repayment option that will survive the repayment system overhaul. The Education Department has explicitly recommended that option for people still in SAVE.
Previously IBR was only available to borrowers experiencing financial hardship, but the Education Department began waiving those rules in December, due to changes from the OBBBA. Under IBR, monthly payments are capped at 10% to 15% of one’s discretionary income. The cap depends on when the loan was originally taken out.
There are technically two other income-driven repayment plans available for the next couple years: Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR). The plans cap monthly payments between 10% and 20% of discretionary income. The PAYE plan requires financial hardship but tends to have more affordable monthly payments. ICR typically has higher monthly payments but has laxer requirements. But these plans are ending in 2028, so borrowers should consider whether it’s worth it to switch to them for a shorter period instead of making the jump to IBR.
The Education Department’s loan simulator can help borrowers choose the most affordable plan for their situation.
Repayment Assistance Plan (RAP)
In July, the new RAP plan is coming out. Like all of its predecessors, RAP is an income-driven plan with a forgiveness component. But the timeline to forgiveness is longer under RAP, requiring about 30 years of qualifying payments compared to the 20- to 25-year timeline of other plans.
Essentially, this plan condenses several pre-OBBA repayment plans into one.
- Monthly payments under RAP range from 1% to 10% of the adjusted gross income, or AGI, of the borrower, with a minimum monthly payment of $10 per month. Borrowers with higher earnings would pay a higher portion of their income (2% for earnings of $20,000; 3% for $30,000 and so on).
- AGI is calculated based on family situation, including dependents and filing status. Spouses who file separately may have AGI calculated separately.
- After on-time payments for 360 months, or 30 years, remaining balances would be canceled.
- If the monthly payment doesn’t cover the interest that accrues on the loans, that interest is waived. The program also reduces the loan’s principal by up to $50 per month if the payment wouldn’t already reduce the principal amount.
Under RAP, minimum monthly payments range from as low as $10 to more than $830, depending on income.
Borrowers in other repayment plans can begin switching to RAP this summer. If you’re enrolled in SAVE, PAYE or ICR, you will have to switch plans by July 2028 regardless and enroll in either RAP, IBR or the new standard repayment plan.
If qualifying for forgiveness is the goal, Mayotte recommends acting sooner than later because the months waiting in the SAVE forbearance don’t count toward on-time payment history.
“I’m recommending switching to another IDR plan now,” she says. “Those pursuing IDR forgiveness are just losing more time by waiting.”
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