Key Points
- A federal district court's dismissal of the SAVE Plan lawsuit has created a legal paradox: without the injunction, the Biden-era repayment program is technically resurrected.
- Missouri and seven other Republican states filed an emergency appeal to the 8th Circuit on March 5, asking the court to reinstate the injunction blocking the SAVE Plan.
- Borrowers enrolled in the SAVE Plan remain in limbo as courts, Congress, and regulators each hold overlapping pieces of the program's fate.
Eight Republican State Attorneys General filed an appeal with the 8th Circuit Court of Appeals to attempt to stop the SAVE Plan once again.
This comes after a wild week of back-and-forth legal drama around the plan.
Last Friday, a Federal court judge dismissed the SAVE lawsuit as being moot - since both parties appeared to agree on an outcome. By Tuesday, these states asked the judge to pause the dismissal pending appeal, and by Wednesday the judge said no.
On Thursday evening, Missouri Attorney General Catherine Hanaway, joined by the AGs of Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma, filed an emergency motion with the U.S. Court of Appeals for the Eighth Circuit (PDF File) asking them to block the lower court's dismissal.
Their request: reinstate the preliminary injunction that had blocked the Biden administration's Saving on a Valuable Education (SAVE) plan since July 2024. That injunction was wiped out when a federal district court dismissed the underlying case, and the states say that dismissal was a serious legal error that could inadvertently revive the very rule they fought to stop.
While this legal drama is almost a perfect made-for-TV movie, it's important for borrowers to note that nothing is changing yet.
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The Ongoing Court Saga
The current stems from a U.S. District Judge John A. Ross dismissing the main lawsuit challenging the SAVE plan.
After nearly two years of litigation the parties had reached a settlement. Both Missouri and the Trump administration jointly asked Judge Ross to convert the existing preliminary injunction into a permanent one, formally vacating most aspects of the SAVE Rule.
Instead, Judge Ross dismissed the entire case for lack of subject matter jurisdiction. His reasoning: with a new presidential administration in place that agreed with the plaintiff states, there was no longer an adversarial dispute before the court.
The states are arguing that ruling is "clearly wrong." When a court dismisses a case, the injunctions that case produced become null and void — meaning the order that had been blocking the SAVE Plan from taking effect was simultaneously extinguished.
Under the Administrative Procedure Act, the federal government cannot simply walk away from a regulation it no longer wants to enforce. Rules don't disappear when administrations change - they require a formal rulemaking process to be repealed. Until that process is complete, the SAVE Rule remains technically on the books.
"The SAVE Plan is no more lawful today than it was when this Court issued its judgment," the states wrote in their emergency motion. They asked the 8th Circuit to act by Monday, March 9.
Notably, the Trump administration agreed with the relief requested - "The United States agrees to the relief requested in this motion."
What This Means For Borrowers
For the roughly 7 million borrowers enrolled in SAVE still, the underlying options haven't changed.
The SAVE plan forbearance is still in effect and the One Big Beautiful Bill Act legislated the end of SAVE. And while interest is accruing, borrowers can make their own decisions to leave. In fact, it may be the best case for borrowers to leave the SAVE plan as soon as possible.
The district court's dismissal creates what the states themselves called "chaos and uncertainty".
Some advocacy groups have suggested the Department of Education should resume the SAVE Plan's provisions, which could actually accelerate loan discharges for federal borrowers — an outcome the plaintiff states specifically sought to prevent.
But until the Department of Education issues their own guidelines, borrowers are simply stuck waiting for answers.
What SAVE Borrowers Should Do Now
All of this limbo has created a lot of uncertainty for borrowers. Here's some key things to remember:
- Do not expect SAVE payments to resume immediately. Borrowers in forbearance remain there regardless of this appeal's outcome while courts sort out the plan's legal status.
- Watch for 8th Circuit for a ruling before March 9. The appeals court was asked to rule quickly, and its decision could either lock the injunction back in place or leave the plan's status unresolved.
- Consider alternative income-driven repayment plans. IBR (Income-Based Repayment) remains available and is not subject to the same legal challenges as SAVE.
- Check your servicer regularly. Loan servicers like MOHELA have been caught in the middle of the legal uncertainty and account statuses may update after court decisions.
- Consult the Department of Education's StudentAid.gov for the most current guidance on repayment plan availability and forbearance status.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.