The entrance to the U.S. Department of Education headquarters building in Washington, June 20, 2025.
A federal judge on Friday dismissed the Trump administration’s request to eliminate a student loan repayment plan that lowered monthly bills for millions of borrowers. This decision has significant implications for the over 7 million student loan borrowers currently enrolled in the Saving on a Valuable Education, or SAVE, federal student loan repayment plan.
Background on the SAVE Plan
Judge John Ross of the U.S. District Court for the Eastern District of Missouri issued an order dismissing the multistate lawsuit blocking the enactment of the SAVE plan. The Trump administration’s failed bid to block the SAVE plan means that borrowers should have access to the program’s benefits, at least for now, according to consumer advocates. These benefits include lower monthly payments and a faster timeline to forgiveness.
Winston Berkman-Breen, the legal director at Protect Borrowers, emphasized the importance of this decision, stating, “As of today, not only is there no legal barrier to delivering those rights through the SAVE plan, but the secretary has a legal obligation to do so.” The Department of Education did not immediately respond to a request for comment.
How the SAVE Plan Works
The Biden administration introduced the SAVE plan in 2023, billing the program as “the most affordable repayment plan ever created.” One of the key features of SAVE is a faster timeline to forgiveness compared to other income-driven repayment, or IDR, plans, which typically offer forgiveness after 20 to 25 years. Under the SAVE plan, borrowers who originally took out $12,000 or less are eligible to have their loans forgiven after 10 years of monthly payments.
For example, an undergraduate borrower with a starting balance of $15,000 would need to make payments on SAVE for 13 years in order to qualify for loan forgiveness. Another benefit of SAVE is lower payments than those under other IDR plans. Monthly payments on SAVE were originally capped at 10% of discretionary income, and slated to drop to 5% of discretionary income in 2024. Borrowers with incomes at or below the federal poverty level would qualify for $0 monthly payments.
Impact on Borrowers
The SAVE plan also includes a cap on interest. Any interest that accrues above a borrower’s monthly payment is waived. If $50 in interest accumulates on your loans in a month, but your payment is only $30, you won’t be charged the additional $20, for example. Borrowers who qualify for $0 monthly payments would not see additional interest charges on their debt.
While the court order may be a temporary reprieve, and it’s unclear how the Trump administration will respond, the decision is a significant development for student loan borrowers. President Donald Trump’s “big beautiful bill” phases out the SAVE plan as of July 1, 2028. For more information on the SAVE plan and its benefits, visit the Department of Education’s website or consult with a financial advisor.
Smart Tip for Readers
To make the most of the SAVE plan, borrowers should regularly review their loan statements and payment schedules to ensure they are on track to meet the plan’s forgiveness requirements. By staying informed and proactive, borrowers can maximize the benefits of the SAVE plan and work towards a more manageable and forgiving loan repayment experience. Read more about the judge’s decision Here
