What It Means For SAVE Plan

The Supreme Court ruled on Friday (PDF File) that federal courts have limited authority to issue nationwide injunctions, a procedural decision with sweeping implications. But for millions of student loan borrowers enrolled in the SAVE Plan, the decision may not lead to any immediate change.

The 6-3 decision split along ideological lines and stemmed from a case involving birthright citizenship. While the ruling did not address student loans directly, it called into question the use of sweeping injunctions that apply beyond the individual plaintiffs in a case. Writing for the majority, Justice Amy Coney Barrett stated that universal injunctions “likely exceed the equitable authority that Congress has given to federal courts.“

The court case was being watched by 7 million borrowers in the SAVE plan for another reason: currently a nationwide injunction is allowing them to remain in forbearance on their student loans, meaning no interest is accruing and no payments are due.

But even in light of this latest Supreme Court ruling, nothing should change for these borrowers in the short term. It will likely still require either a final court ruling, or action from Congress, to end the SAVE forbearance.

The SAVE Plan Remains Blocked

The SAVE student loan repayment plan, a major initiative of the Biden administration, was halted earlier this year by a nationwide injunction issued by the Eighth Circuit Court of Appeals. The injunction blocks provisions multiple aspects of the SAVE Plan, and even aspects of other plans such as ICR and PAYE.

The ruling came after seven Republican-led states filed suit, arguing the plan unlawfully canceled debt without Congressional approval. The court issued an injunction to stop further issues while the court reviewed the case, citing the “major questions doctrine” and finding that the Secretary of Education may have overstepped by granting forgiveness under authority meant only for repayment management.

The result is that the Department of Education places all borrowers enrolled in the SAVE plan into an administrative forbearance, pending the outcome of the case or legislative changes. For example, the currently proposed Big Beautiful Bill would have legislatively ended the SAVE forbearance and migrated borrowers into the IBR plan.

And while the Supreme Court’s new ruling casts doubt on the nationwide scope of such injunctions, it does not automatically nullify them. That would require a motion to review to be filed by the Department of Education, which is now under the control of the Trump administration. As such, it’s highly unlikely such a review will be filed.

Borrowers Will See No Change In The Short Term

While the Supreme Court questioned the broad reach of universal injunctions, it doesn’t automatically void previous rulings or injunctions. There are more legal processes for that to happen – and it would require the administration to take action. 

Any change would now depend on whether the Trump administration asks the court to review or narrow the existing block. So far, there is no indication the Trump administration plans to do that. Without such a request, the injunction will likely remain in place until the 8th Circuit Court issues a final decision.

As we previously mentioned in our SAVE timeline estimates, this means that borrowers in the SAVE forbearance still likely won’t face payments until 2026. The main paths forward are the court rules and borrowers must change repayment plans, or Congress acts, and forces borrowers into new plans.

Until either happens, the SAVE forbearance will continue.

What SAVE Student Loan Borrowers Can Do Now

For most borrowers in the SAVE Plan, no action is required. They should be using this time to improve their finances – building an emergency fund, paying off other debt, or investing for retirement.

However, some borrowers may want to leave the SAVE plan forbearance early, especially those pursing Public Service Loan Forgiveness.

Borrowers can currently switch to Income-Based Repayment (IBR) plan, which remains available and includes forgiveness after 20 or 25 years of payments, depending on when the loan was taken out. Unlike SAVE, IBR is clearly authorized under current law and is not subject to the same legal questions.

Remember, no immediate action is required. The Department of Education has not issued any new guidance since the Supreme Court ruling. 

In the meantime, those in the SAVE plan forbearance should use the time to run payment simulations and assess how another payment plan could impact their monthly payments. Sometime in the next 12 months, it’s likely SAVE borrowers will be forced to move to another plan.

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