Key Points
- Four borrowers filed suit Monday demanding the Education Department immediately cancel eligible student loans and reopen the SAVE plan, following the Feb. 27 dismissal of the main challenge to the program.
- The complaint argues tens of thousands of borrowers are currently eligible for automatic loan discharge and millions more qualify for lower monthly payments but the Education Department refuses to act.
- The case is already at risk: the Eighth Circuit Court of Appeals could reinstate an injunction blocking SAVE as soon as today, potentially stopping any forgiveness before it starts.
Four student loan borrowers filed a federal lawsuit Monday demanding the U.S. Department of Education immediately cancel eligible student loans and fully reopen the SAVE income-driven repayment plan. However, the Eighth Circuit Court of Appeals could issue an injunction as early as today to either clear the path for forgiveness or shut it down again.
The complaint, filed in U.S. District Court for the District of Columbia as Havens et al. v. U.S. Department of Education (Case No. 1:26-cv-00816), names Education Secretary Linda McMahon as a defendant and argues the department is illegally refusing to carry out its own regulations.
This comes a little over a week after a Federal court judge dismissed the main lawsuit against the SAVE student loan repayment plan.
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The Legal Opening Created By The Original Lawsuit's Dismissal
This new lawsuit traces its origin to a February 27, 2026 ruling that court dismissed Missouri v. Trump, the Republican-led lawsuit that had provided the legal basis for blocking the SAVE plan since 2024.
The court found there was no longer a live dispute between the parties: the Trump administration had declined to defend the plan, and Congress had already passed legislation phasing it out by July 2028 through the One Big Beautiful Bill Act.
With that dismissal, attorneys representing borrowers argued the associated federal injunction (which had blocked loan forgiveness and payments under SAVE for nearly two years) was automatically dissolved. Missouri's attempt to pause the dismissal pending appeal was rejected by the district court last week.
This new lawsuit builds directly on that legal opening. It argues that because no valid court order currently blocks the SAVE plan, and because the SAVE Final Rule remains on the books as valid federal regulation, the Education Department has a mandatory legal obligation to implement it.
"As of this filing, the Department maintains a valid Final Rule creating the SAVE Plan, Congress has considered the statutory scheme and provided for a smooth transition away from SAVE in statute at a future date, and there is no court order preventing borrowers from receiving those benefits," the complaint reads. "Today, the SAVE plan is the law on the books."
Department of Education Guidance
Despite the dismissal of the primary SAVE lawsuit, the Education Department has taken no steps to reopen the plan or address public concerns. Its website still indicates that SAVE repayment and loan forgiveness remain blocked. We reached out to the Department of Education for comment last week, and never received a response.
The department took "no position" when Missouri sought a stay of the dismissal. It has issued no public statement, press release, or servicer guidance indicating it intends to resume SAVE or what the plan is. The plaintiffs argue this inaction (combined with active denials of relief requests) constitutes unlawful withholding of agency action and arbitrary and capricious conduct under the Administrative Procedure Act.
The lawsuit asks the court to declare the department's inaction unlawful, order immediate cancellation of all Direct Loans meeting SAVE discharge requirements, require the department to reopen enrollment, and stop collecting payments from borrowers who should qualify for loan forgiveness.
This Challenge Comes Amidst Another Legal Cliffhanger
This lawsuit may not make it very far depending on what happens with the main SAVE lawsuit.
Missouri has appealed the dismissal of the original SAVE lawsuit to the Eighth Circuit — the same court that issued the injunction blocking SAVE in 2024 and expanded it to cover the entire program in February 2025. That court could issue a new injunction reinstating the block on SAVE as soon as today, which would likely freeze the new D.C. case.
Separately, a parallel injunction issued in response to a Kansas-led lawsuit remains dormant but could be revived.
It appears that the Department of Education would prefer the SAVE Final Rule to be invalidated by the court, as it would allow them to avoid negotiated rulemaking to repeal the regulations. This would allow a much faster process to move borrowers in the SAVE administrative forbearance back into repayment.
What Borrowers Should Do Now
Nothing is currently changing for student loan borrowers in the SAVE Plan. While this new lawsuit offers hope - it may also go nowhere.
Furthermore, the student loan forgiveness sought under the plan is for those that have already reached 20 or 25 years of repayments. Many of those same borrowers were encouraged to switch back to IBR last December to qualify. There may be very few left actually eligible for loan forgiveness under SAVE (though we don't know as the data has not been shared).
If the 8th Circuit Court re-instates the SAVE injunction, this lawsuit won't go anywhere. However, if the 8th Circuit does NOT re-instate the injunction, this could be a case worth following.
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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.