A surprise court decision for millions of student-loan borrowers brings debt relief back into the picture

• A court dismissed Trump's attempt to eliminate the SAVE student-loan repayment plan ahead of schedule.
• Lawmakers and advocates are urging the Education Department to restart processing debt relief for eligible borrowers.
• The SAVE plan is still on track to be phased out in 2028.

SAVE is saved — for now.

In the latest twist to determining the fate of the SAVE student-loan repayment plan, a district judge said in a February 27 ruling that he would not sign off on President Donald Trump's proposed settlement to eliminate the SAVE plan.

That means that Trump's attempt to ax SAVE before its planned phaseout in 2028 is moot, and the administration cannot move forward with an accelerated timeline unless it receives a new court ruling or undergoes the lengthy negotiated rulemaking process.

Advocates and Democratic lawmakers said that the judge's decision means that the Department of Education should move forward with processing debt relief for eligible borrowers on SAVE.

"This decision formally ends the SAVE injunction that has forced over 7 million SAVE borrowers into economic limbo—pushing meaningful debt relief and affordable monthly payments out of reach," a group of Democratic lawmakers, including Sens. Jeff Merkley and Bernie Sanders, wrote in a March 4 letter. They added that they're calling on the department "to implement the benefits of the SAVE plan and administer loan cancellation for borrowers on the SAVE Plan who are eligible for such relief immediately."

The Department of Education told Business Insider, following the court's decision, that it was evaluating the ruling and did not respond to a subsequent request for comment on what the ruling means for borrowers enrolled in SAVE.

The SAVE plan was created by former President Joe Biden in 2023, and it intended to give borrowers cheaper monthly payments with a shorter timeline to debt relief. Since the summer of 2024, the plan has been blocked due to litigation, and the Trump administration announced a proposed settlement with the state of Missouri — one of the states seeking to block SAVE — that would eliminate the plan ahead of schedule.

During this time, borrowers enrolled in SAVE have been on forbearance. The Department of Education restarted interest charges on SAVE accounts in August 2025 and encouraged borrowers to switch to a different income-driven repayment plan and begin making payments. The department also said in court updates that the block on SAVE prevented it from processing loan forgiveness for borrowers who reached their payment thresholds on any IDR plan after April 2025.

Advocates said there's no reason the department cannot move ahead with processing that relief.

"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," Winston Berkman-Breen, legal director at advocacy group Protect Borrowers, said in a statement. "The U.S. Department of Education must immediately identify borrowers who are eligible to have their loans cancelled under SAVE and instruct their student loan servicers to cancel those loans."

What's next for student-loan repayment

Attempts to block SAVE aren't over. On March 2, the state of Missouri filed a motion to pause the ruling dismissing the settlement, asking a Missouri district court to reinstate the block on the SAVE plan and prevent the Department of Education from processing any debt relief through the plan.

Missouri said in its motion that, because of the ruling, borrowers could start applying for debt relief again, and pausing the ruling would allow the court to review the case before those applications begin.

"A short postponement will not materially hamper any contrary reliance interests—because the SAVE Rule as it has been administratively stayed or preliminarily enjoined for nearly two years," Missouri wrote in its motion. "Thus, borrowers will not be harmed because a brief administrative stay merely maintains this status quo of their payment obligations."

For now, borrowers enrolled in SAVE are permitted to stay on the plan until the summer of 2028, when Trump's "big beautiful" spending legislation calls for its phase-out. After that point, borrowers will have two options to repay their loans: a standard repayment plan and a new Repayment Assistance Plan, which has less generous terms than SAVE, including forgiveness after 30 years of payments.

Those plans are set to become available to new borrowers on July 1. Additionally, the spending legislation will implement new caps on borrowing for advanced degrees: a $100,000 lifetime cap for graduate students and a $200,000 cap for professional students. The department compiled a list of 10 programs that will qualify for the professional program designation, including law and dentistry. Advocates and lawmakers have pushed to expand that definition to include postgraduate nursing programs, as well.

As for SAVE, borrowers are awaiting guidance from the Department of Education. Borrowers enrolled on the plan previously told Business Insider that the lower monthly payments through SAVE have been a lifeline, and they're unable to afford the anticipated higher payments on a different plan.

"I'm bracing for an astronomical bill," Brenda McCoy, a 60-year-old SAVE borrower, said. "My goal was to be self-sufficient. I was making the payments, I was being a responsible person, but it has to be something I can afford."

Have a story to share? Reach out to this reporter at asheffey@businessinsider.com.