The SAVE student loan repayment plan is dead — and a federal appeals court just made that official.

The U.S. Court of Appeals for the Eighth Circuit ruled on March 9, 2026 (PDF File) that a lower court wrongly dismissed the Republican states’ lawsuit against the plan, directing the district court to enter a December 2025 settlement agreement that permanently bans the Biden-era income-driven repayment program. 

The request to force the joint settlement was one of the alternatives presented in the GOP appeal to the 8th Circuit Court.

Here’s what borrowers need to know.

Background: The Legal Fight Over SAVE

The SAVE Plan (Saving on a Valuable Education) was created by the Biden administration in 2023 as a revision to the existing REPAYE (Revised Pay As You Earn) income-driven repayment plan. Established under Section 455 of the Higher Education Act of 1965 (20 U.S.C. § 1087e), SAVE offered lower monthly payments and accelerated loan forgiveness timelines compared to earlier income-driven repayment options.

Seven Republican-led states (Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma) sued to block the plan in the Eastern District of Missouri, arguing the administration had exceeded its statutory authority in creating it.

Federal courts agreed: the 8th Circuit issued an injunction halting SAVE in 2024, placing enrolled borrowers into a payment-free forbearance while the litigation proceeded.

After President Trump took office in January 2025, his administration and the plaintiff states negotiated a settlement, which both sides signed on December 9, 2025.

The settlement would have resolved the litigation by having the federal government agree to permanently wind down SAVE. However, the district court dismissed the case instead. That dismissal triggered the states’ appeal to the Eighth Circuit.

What The Settlement Agreement Requries

The December 2025 settlement is sweeping in scope. Under its terms, the Department of Education must:

• Stop enrolling any new borrowers in SAVE and deny all pending applications.
• Continue moving current SAVE borrowers to other repayment plans.
• Refrain from forgiving loans under SAVE’s income-contingent repayment authority as interpreted by the SAVE Final Rule.
• Not implement any provisions of the SAVE Plan Final Rule, with one narrow exception: a provision about deferment and forbearance counting toward forgiveness eligibility (34 C.F.R. § 685.209(k)(4)(iv)), which took effect July 1, 2024 and was never challenged in the lawsuit.
• Not revive or enroll borrowers in the original REPAYE plan.
• Pursue formal rulemaking to officially repeal the SAVE Final Rule, consistent with the One Big Beautiful Bill Act signed into law on July 4, 2025.

The settlement also creates an ongoing notification requirement: if the Department plans to forgive more than $10 billion in federal student loans in any single month, it must give the Missouri Attorney General’s office at least 30 days’ written notice, identifying the legal authority used. That oversight provision runs for ten years from the date of the agreement.

The settlement creates no third-party beneficiary rights — meaning individual borrowers cannot use it to sue the government.

What This Means For Borrowers

For the roughly seven million borrowers who are in SAVE forbearance, the Eighth Circuit’s ruling cements what has been apparent since the 2024 injunction: SAVE is dead.

Borrowers currently sitting in SAVE forbearance will need to transition to a different federal repayment plan in the future (exact SAVE timeline still TBD). The Department said in the original settlement agreement that additional communication will be coming soon. 

Borrowers currently have the options of Income Based Repayment (IBR), Pay As You Earn (PAYE), Income Contingent Repayment (ICR), and the standard repayment plans. It’s important to note that that both PAYE and ICR will phase out by June 2028. Depending on timing, borrowers may be able to directly enroll in the new Repayment Assistance Plan (RAP) which launches in July.

Importantly, the settlement does not eliminate all loan forgiveness pathways. Borrowers enrolled in SAVE can still receive forgiveness through:

Those programs rely on separate legal authority and are unaffected by the SAVE settlement.

What Comes Next

The Eighth Circuit’s ruling orders the Eastern District of Missouri to enter the settlement as final judgment — immediately. The emergency motion the states had filed to get an injunction is now moot because the settlement will take effect.

For borrowers in SAVE, it’s more important than ever to do the math about whether you should change repayment plans now, or wait. For borrowers pursuing forgiveness under PSLF, it’s likely better to change ASAP.

For now, all borrowers in the SAVE forbearance will need to wait for further guidance from the Department of Education. Check for updates on the Court Actions page for future communication.

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