Key Points
- The four borrowers behind the last lawsuit challenging the SAVE plan shutdown filed their response on August 7, 2026. They argue that when the courts erased SAVE in March, the older REPAYE plan automatically came back, and the Education Department is illegally pretending it didn't.
- The Education Department wants the case thrown out. It says an appeals court already found REPAYE's forgiveness has the same legal problem as SAVE, that two plaintiffs skipped a December 31, 2025 window that would have gotten them tax-free forgiveness, and that the money at stake is about $55 a month.
- Even a courtroom victory wouldn't change much. Congress already ended REPAYE effective July 1, 2028, so nearly every borrower lands in RAP or IBR either way.
The last remaining lawsuit trying to stop the SAVE plan shutdown saw it's next round of filings. On August 7, the four borrowers behind the case filed their response to the Education Department's request to throw the case out, and they asked the judge for an emergency order that would pause the forced move of roughly 7 million borrowers into new repayment plans.
The case, Havens v. U.S. Department of Education, is pending in federal court in Washington, D.C.
Quick refresher: SAVE replaced the older REPAYE plan in 2023, courts blocked SAVE, and the Department settled the court fight. In March 2026, a court order wiped the SAVE rule off the books entirely. The Department then announced it would move everyone out of the SAVE forbearance and into other plans, in batches, starting July 1. Meanwhile, the One Big Beautiful Bill Act also formally ended ICR, PAYE, REPAYE, and SAVE by July 1, 2028.
The borrowers' main argument is this: when a court erases a rule that replaced an older rule, the older rule comes back. Think of it like deleting a software update - you don't end up with no program, you end up back on the old version. On that logic, REPAYE has been the law since March, and the Department's refusal to offer it is what their lawyers call a "shadow repeal". They are killing a repayment plan without going through the formal public process the law requires.
The government's answer is also simple: you can't bring back a plan the courts already said was illegal. In 2025, the appeals court handling the SAVE fight ruled that REPAYE's forgiveness terms break the law in the same way SAVE's do. In the Department's argument, erasing SAVE didn't restore REPAYE, rather it left both plans dead. Furthermore, Congress now requires moving everyone to new plans by July 2028 anyway. The Department adds some procedural issues as well, such as borrowers waited too long to sue, and that their actual losses are small dollar amounts, that in some cases may be their own fault.
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The Borrowers' Strongest Arguments
The "old rule comes back" principle is real law. Courts have said it for decades, if a rule is erased, the rules revert back to what was in place before. It's not blank.
They also catch the Department being inconsistent. When earlier court rulings created a problem with PAYE and ICR enrollment, the Department fixed it the proper way: it published a proposed rule, took public comments, and finalized the change. When the same court fight supposedly required killing REPAYE, the Department skipped all of that and simply announced it in a settlement. If the formal process was needed for one, why not the other?
And there are receipts. The government's own court declaration admits that plaintiff Heather Havens hit the forgiveness finish line on two of her loans in August 2024, and plaintiff Elizabeth Robeson in October 2024, based on the Department's own payment counts. Robeson has made 325 qualifying payments when only 216 were required. Before the courts shut things down, the Department forgave loans for about 153,000 SAVE borrowers in similar situations. These borrowers are asking to be treated the same way, not asking for anything new.
Why The Government's Side Looks Promising
The Department's case rests on one major pillar: in February 2025, the appeals court that handled the SAVE litigation said REPAYE's forgiveness terms have the same legal defect as SAVE, because in its view the law never let the Education Secretary forgive loans under those plans in the first place.
Courts generally won't force an agency to bring back an old rule that has the same problem as the one just struck down. Asking a D.C. judge to revive a plan another court already labeled unlawful is not likely.
The actual dollar amount damages are a problem too. Set aside the tax claims, and the government says the actual harm is about $55 a month combined: $14 for one plaintiff and $41 for another, compared to the cheapest plans available today.
It also says lead plaintiff Havens did her math wrong and would pay $401 a month under REPAYE versus $119 under IBR, meaning she'd pay $282 more if she won. The Department has promised the court it will refund any overpayments if the borrowers ultimately prevail. Judges almost never grant emergency orders over money that can be paid back later.
And it's important to note that REPAYE was never a great plan. For most borrowers, REPAYE charges the same 10% of discretionary income as PAYE and the newer version of IBR, using the same income formula.
In some ways it's the worst of the three:
- It counted your spouse's income even if you filed taxes separately
- Unlike PAYE and IBR, it had no cap on how high payments could climb (which is why the government calculates that lead plaintiff Heather Havens would pay $401 a month under REPAYE versus $119 under IBR)
- Loan forgiveness is 20 years for undergraduate borrowers, but 25 years if you have graduate debt.
The lawsuit is a fight to restore a plan that, for most people, works out nearly the same as the options already on the table.
Missed Deadlines Don't Help The Borrowers' Case
There's a second theme running through the government's argument that borrowers should understand, because it's doing real damage to the case: the plaintiffs kept showing up late.
The clearest example involves taxes. Forgiven student loans have been tax-free under a pandemic-era law, but that protection expired at the end of 2025.
Forgiveness processed in 2026 or later generally gets reported to the IRS on a 1099-C form, which can mean a five-figure tax bill, known as the student loan tax bomb.
In a separate case last fall, a court-approved settlement gave borrowers an out: apply to switch into IBR, ICR, or PAYE by December 31, 2025, and if you had already earned forgiveness, you would get it tax-free with no 1099-C.
That deal made national headlines in October 2025. The two plaintiffs whose whole case now centers on avoiding a tax bill never applied. They say the Department never told them, that a call center rep told Havens her forgiveness "would be processed automatically," and that taking the deal meant giving up refunds. Fair points. But the judge will notice the exit door was open for months.
And timelines were a factor in the borrowers' Missouri filing as well. The borrowers tried to join the main SAVE case there, but filed three days after that case had already closed. On July 30, the Missouri court said no: too late, and reopening a settled case would cause "monumental upheaval."
And in this case, they sued on March 9 but didn't ask for emergency help until late June, months after the Department publicly announced the transition plan. Their explanation was that the Department told the court no one would be forced off SAVE before September 29, 2026, then sent Havens a 90-day switch notice six days later. That's a fair complaint, but courts have denied emergency orders over far shorter delays.
What This Means For Your Student Loans
If you're one of the roughly 6 million borrowers still sitting in the SAVE forbearance, this case changes nothing yet. Batch notices have been going out since July 1, and the deadline for those who first received a notice would be September 29, 2026.
Waiting is not free. Months in the forbearance earn zero credit toward student loan forgiveness, and our own analysis found that staying parked in SAVE has already cost typical borrowers thousands in lost progress.
The court filings also document a messy transition. One borrower got official notices with three different payment amounts and three different start dates within three weeks. Another was dropped into a Standard plan she never picked and is now delinquent for the first time in her life.
Just this week we've seen incorrect PSLF data issues, and false delinquency notices. Whatever happens with the lawsuit, double-check every number your servicer sends you.
Our Take
Our take is that this lawsuit is not likely to rescue anyone. The borrowers' core argument is stronger than we previously gave it credit for (this last filing was their strongest yet), and it lands in front of a judge who has endorsed the underlying principle. But the emergency request will probably fail on the money math and the timing, and the bigger claims run head-first into the appeals court ruling and Congressional action.
More importantly, winning wouldn't deliver what borrowers really want - lower repayment options under SAVE. Congress already scheduled REPAYE's underlying law for repeal on July 1, 2028, so even a full victory buys less than two years. For most borrowers the monthly difference between REPAYE and the plans that exist now is tens of dollars, and some would pay more.
As for forgiveness, reaching it requires 20 to 25 years of qualifying payments, a line very few borrowers will actually cross before the 2028 deadline, outside the one-time account adjustment that ended in 2024. The realistic prize is backdated, potentially tax-free forgiveness for the small group who crossed the finish line before 2026, which actually already appears to be what the separate AFT case says happens anyway.
Everyone else ends up in RAP or IBR in 2028, regardless of the outcome of this case.
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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.