SAVE The Plan: What’s Next for Borrowers After Dismissal
Student loan borrowers have been thrown another curveball after a federal judge last week unexpectedly dismissed a legal challenge to former President Joe Biden’s Saving on a Valuable Education Repayment plan, known as SAVE.
The expulsions were a blow to the Trump administration’s student loan reform plans, which would have opted for INSTALLING out of the picture instead of the upcoming Recovery Assistance Program that was created by President Donald Trump’s marquee policy package, the One Big Beautiful Bill Act.
However, the Trump Education Department’s pushback has not won the millions of borrowers still enrolled in SAVE. According to Betsy Mayotte, president of the Institute of Student Loan Advisors (TISLA), it’s just a new level of legal limbo they’ve been in for years.
“This is an uncharted territory,” Mayotte said, noting that even though the court dismissed the lawsuit against SAVE, he doesn’t expect the Department of Education to restart the program — at least not “without a fight.”
Where things stand now with SAVE
In 2023, Biden launched the SAVE program, pitching it as the most affordable option for paying off student loans in history.
The program set payments based on 5% of the borrower’s income, redefining that term to apply to earnings above 225% of the federal poverty line. In short, this allowed millions of middle-income borrowers to qualify for lower payments — often as low as $0 per month — while putting enrollees on a path to loan forgiveness in as little as 10 years.
From the start, SAVE faced swift legal opposition. In June 2024, the program was temporarily suspended due to legal challenges. About 8 million borrowers were registered at the time, and about 150,000 borrowers had received loan forgiveness under the new SAVE conditions. Everyone else’s debts were put into forbearance while the legal battle began.
Then Trump won the election, and the Department of Education inherited the case, which eventually became obsolete. Meanwhile, the OBBBA officially declared the end of SAVE by disbanding the program in July 2028. And in December, the Trump administration proposed to settle the case with the plaintiffs in an agreement that would end Biden’s “illegal SAVE program,” pending court approval.
What happened next surprised borrowers and loan professionals alike. On February 27, instead of ruling on the deal as expected, federal court judge John Ross dismissed the lawsuit that had stopped SAVE entirely. The plaintiffs quickly filed a motion to temporarily suspend the ruling while they appealed the dismissal, but Ross doubled down on his decision to deny the motion on Wednesday.
Ross explained that since the plaintiffs and the Trump administration both oppose the SAVE program, there is no valid argument, so the lawsuit — and the settlement agreement — is “a mistake.”
“It has not been lost on the Court that millions of borrowers enrolled in the SAVE program have been patiently waiting for clarity during this case,” Ross wrote in a court filing. “However, that clarification must come from the Department of Education, not from this Court.”
So far the Ministry of Education has not spoken publicly about the dismissal. Education Secretary Linda McMahon and the department’s press team did not respond to Money’s requests for comment. A web page dedicated to keeping borrowers informed about the legal challenge has not been updated since December.
In lieu of an official answer, Money asked a few student loan experts to share their advice. Here’s what borrowers should know.
1. STORAGE is technically back, but temper your enthusiasm
When the federal court issued its decision last week, some student loan lawyers were quick to cheer.
“For nearly two years, borrowers in the SAVE program have been denied their legal rights to reduce payments and cancel loans,” said Winston Berkman-Breen, legal director of the advocacy group Protect Borrowers, in a statement. Now “there is no legal barrier to bringing those rights through the SAVE program, [and] the Secretary has a legal obligation to do so.”
The group told Money that the dismissal opened a reasonable window for borrowers to receive their benefits under the SAVE program. The reason is that SAVE is technically back for current borrowers until it officially expires in 2028 – and that the Department of Education has to respect that.
But not everyone is convinced that it will actually happen.
“Anything is possible,” said Adam Minsky, an attorney who works on student loan policy, but he’s not optimistic about how things will turn out.
Minsky says if the department wants to fight restarting SAVE temporarily, it can choose to end the program even before 2028, through the rulemaking process, although that option is complicated and usually takes at least a year.
Mayotte, with TISLA, had similar reservations. Even if the department wanted to restart the SAVE (which you don’t), it says “these things won’t be turned on and off for a second.”
“By the time this all works out,” he adds, “I think we’ll be going into 2028 and it’s going to be a tipping point.”
2. SAVING can help other borrowers temporarily
Despite the flurry of legal developments, SAVE’s payment freeze that began in June 2024 still applies to borrowers already enrolled in the program.
No new borrowers are allowed to sign up, and all forgiveness benefits are suspended. But patience — which still applies today — has at least managed to protect current subscribers from some uncertainty as it weathers legal challenges on the way to the inevitable dissolution. It is not clear whether the Ministry of Education has any plans to stop before 2028.
In the meantime, Minsky and Mayotte said borrowers already enrolled in SAVE who don’t have room in their budget to pay off their loans can stay on hold and take things out if they need to.
But that is a trade-off that must be weighed carefully. SAVE borrowers’ debts are now increasing because interest began accruing again in August 2025. SAVE subscribers also do not receive credit for forgiveness with any payment plan, even if they decide to pay during the forbearance period.
In addition, Minsky says they should be aware of the coming financial cliff when this temporary tolerance finally ends.
“Be prepared for higher payments under other payment plans when patience runs out,” he said. “And eventually it will end.”
3. Start looking at other payment plans
The federal court’s decision on SAVE was unexpected – and exciting – for some. But experts stress that the Department of Education likely won’t start issuing forgiveness benefits between now and 2028.
There are limited situations where staying in SAVE can be beneficial, especially for low-income borrowers. But SAVE will end. The only question is: when in 2028 as OBBBA requires? Even if the Ministry of Education will try to close SAVE immediately?
Because of that inevitability, advisors recommend that SAVE deductions start looking at other income-driven repayment options, or IDRs, before they are forced.
Income Based Repayment (IBR)
For people who want to get on board before the RAP starts in July, their main option is Income-Based Repayment, or IBR, which is the only current income-driven payment method that will survive the payment system overhaul. The Department of Education clearly recommended that option to people in SAVE.
IBR was previously only available to borrowers facing financial difficulties, but the Department of Education began to waive those rules in December, due to changes from the OBBBA. Under IBR, monthly payments amount to 10% to 15% of personal income. The cap depends on when the loan was originally taken out.
There are two other income-driven payment plans available for the next few years: Pay As You Earn (PAYE) and Income Based Payment (ICR). Plans include monthly payments between 10% and 20% of earned income. A PAYE plan requires financial hardship but often has affordable monthly payments. ICR usually has higher monthly payments but has looser requirements. But these programs expire in 2028, so borrowers should consider whether it’s worth switching to them for a shorter period instead of jumping into IBR.
The Department of Education’s loan simulator can help borrowers choose the most affordable plan for their situation.
Repayment Assistance Plan (RAP)
In July, the new RAP program comes out. Like all its predecessors, the RAP is an income-driven program with a forgiving component. But the timeline for forgiveness is longer under RAP, requiring about 30 years of eligible payments compared to the 20- to 25-year timeline for other programs.
In effect, this system combines the pre-OBBA payment systems into one.
- Monthly payments under the RAP range from 1% to 10% of the borrower’s adjusted gross income, or AGI, with a minimum monthly payment of $10 per month. High-income borrowers will pay a higher percentage of their income (2% on $20,000 of income; 3% on $30,000 and so on).
- AGI is calculated based on family status, including dependents and filing status. Married couples filing separately may have AGI calculated separately.
- After paying on time for 360 months, or 30 years, the remaining balances will be canceled.
- If the monthly payment does not include the interest that accrues on the loan, that interest is waived. The program also reduces the principal of the loan by up to $50 per month if the payment would not reduce the principal amount.
Under RAP, minimum monthly payments range from as low as $10 to more than $830, depending on income.
Borrowers on other payment plans can begin switching to RAP this summer. Finally, those enrolled in SAVE, PAYE or ICR will have to change plans in July 2028 and choose RAP, IBR or the new regular payment plan.
If being eligible for forgiveness is a goal, Mayotte recommends taking action sooner rather than later because the waiting months in the LINDISA forbearance do not count against the history of timely payment.
“I recommend that I switch to another IDR program now,” he said. “Those pursuing IDR remission are losing a lot of time by waiting.”
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