Future of the SAVE Repayment Program in Limbo as Federal Appeals Court Scrutinizes ED's Authority
By Maria Carrasco, NASFAA Staff Reporter
The 8th U.S. Circuit Court of Appeals extended an order blocking the Department of Education (ED) from further implementing the Saving on a Valuable Education (SAVE) repayment plan as it faces multiple legal challenges.
Legal challenges to the program have proliferated since its rollout. In July when additional provisions of the program began to take effect, the 8th U.S. Circuit Court of Appeals initially sided in favor of a lawsuit led by Missouri’s attorney general and five other Republican-led states, which argued the department lacked the authority to carry out the new repayment program. July’s decision fully blocked the SAVE program for an unclear length of time.
On Friday, the 8th U.S. Circuit Court of Appeals issued its preliminary injunction, which extended the order and fully blocked the SAVE plan. The decision prevents ED from providing loan forgiveness under SAVE, not charging borrowers accrued interest, and further implementing the programs’s payment-threshold provisions.
However the decision does not revoke any debt forgiveness that has already been carried out with the judges noting that the challenge to the program "cannot turn back the clock on any loans that have already been forgiven.”
In the order, the judges wrote the injunction will remain in effect until further order of the court or from the U.S. Supreme Court.
Following the first legal setback in July, ED confirmed that it would put the 8 million borrowers enrolled in the SAVE plan in an interest-free forbearance, which would not bear credit towards other student loan repayment programs, including Public Service Loan Forgiveness (PSLF) or other IDR based programs.
On Monday, Education Secretary Miguel Cardona confirmed that those borrowers would continue to be in an interest-free forbearance while litigation continues. The department plans to send regular updates to affected borrowers in the “coming days.”
In a statement Cardona said that “it’s shameful that politically motivated lawsuits waged by Republican elected officials are once again standing in the way of lower payments for millions of borrowers.”
“The administration strongly disagrees with the Eighth Circuit’s decision blocking the Biden administration’s SAVE plan,” Cardona continued. “If allowed to stand, this ruling would force millions of borrowers to pay hundreds of dollars more each month. … The ruling rejects a practice of providing loan forgiveness that goes back 30 years.”
Publication Date: 8/13/2024
James P | 8/14/2024 10:39:00 AM
Borrowing student loans and not paying them is a lose, lose, lose scenario as well.
Raymond G | 8/13/2024 7:49:57 PM
FAFSA roll out has not gone well because loan forgiveness seems to have been the priority. So in that respect it seems it was very political.
Raymond G | 8/13/2024 7:44:40 PM
FSA used to be under the Treasury. Abolishing the Dept of Education does not necessarily abolish federal aid. That is what the news isn't saying amoung other things. It's very bias.
David S | 8/13/2024 9:2:00 AM
Who can right now honestly say that financial aid professionals are fully equipped to help students plan for repayment?
We can argue all day as to whether the US Department of Education has the authority to create student loan repayment plans (I vote yes in case anyone wants to debate me), but the result of these legal challenges - which are brought forward by parties not being injured in any way whatsoever but rather motivated purely by politics - is complete chaos and confusion, and I think that is the plaintiffs' goal. These actions will strengthen the conservative argument to dissolve the Department of Education entirely and get the federal government out of the student loan business entirely.
The result of that will be the erosion of access, a heightened affordability crisis, and fewer educated Americans. A lose-lose-lose scenario.
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