The roller coaster ride for borrowers enrolled in a key affordable repayment plan continues.
On Monday, the 8th Circuit directed a district court to approve President Donald Trump’s proposed settlement with the state of Missouri to eliminate the SAVE student-loan repayment plan.
The plan has been embroiled in a legal back-and-forth for years. Most recently, a district court declined to rule on the proposed settlement, which some advocates and lawmakers saw as a win for borrowers and urged the Department of Education to carry out relief under SAVE.
However, the 8th Circuit’s ruling means that, once approved, the department will move forward with the settlement and require enrolled borrowers to transition to a new plan.
“In the coming weeks, the Department will issue clear guidance on next steps for borrowers enrolled in the illegal SAVE Plan, including details regarding how borrowers can move into a legal repayment plan,” Nicholas Kent, the undersecretary of education, told Business Insider in a statement. “The Trump Administration will continue to realign the federal student loan portfolio to better serve students and taxpayers.”
The settlement would give borrowers “a limited time” to select a new repayment plan and begin repaying the loans. Once the settlement is approved, the department will not enroll any new borrowers in SAVE, it will deny pending applications, and move all enrolled borrowers to existing plans.
Advocates criticized the 8th Circuit’s ruling, saying it will push borrowers into unaffordable monthly payments.
“The millions of borrowers who had a right to lower monthly student loan payments and relief through SAVE will now face thousands of dollars in higher bills every year thanks to the right-wing campaign against borrowers,” Winston Berkman-Breen, legal director at advocacy group Protect Borrowers, said in a statement.
SAVE was created by former President Joe Biden in 2023 and intended to give borrowers cheaper monthly payments and a shorter timeline to debt relief. The plan has been blocked since the summer of 2024 due to litigation from GOP-led states, including Missouri, which said that the relief through SAVE was unconstitutional.
This ruling pushes SAVE borrowers off the plan earlier than scheduled. Trump’s “big beautiful” spending legislation called for the plan to be phased out by 2028, giving enrolled borrowers more time to prepare for higher payments on a new plan.
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