Court Dismisses SAVE Case Without Judgement
SAVE is now a Zombie! Not dead, but not alive!
If you’re reading this, I probably don’t need to recap the two-year legal battle over the SAVE plan. We’ve covered it extensively. In our last update, we shared that the plaintiffs and the defendants (who were essentially aligned at that point) had agreed to a settlement to wind down SAVE. The expectation was that the court would approve that settlement and provide a structured off-ramp. That didn’t happen.
Instead, at the end of February, the court dismissed the case as moot, reasoning that there was no longer an active dispute between the parties. In other words, if no one is fighting anymore, there’s nothing for the court to decide. The court also noted the SAVE wind down provisions in the OB3 legislation. In plain English, the SAVE lawsuit is over with no ruling.
This creates a very interesting dynamic.
On one hand, there is no longer a court order blocking SAVE. Advocacy groups are already calling for SAVE payments to resume and SAVE-related forgiveness to be granted. Don’t hold your breath! With OB3 already getting rid of SAVE by July 2028, it is very unlikely DOE will revive it.
On the other, there are no longer any legal barriers preventing DOE from dismantling SAVE. And based on prior statements and actions, it’s clear the administration wants to eliminate it as quickly as possible. Technically, they should follow the months-long rulemaking process. But administrations have overridden this before. In fact, the previous administration bypassed it with the early implementation of SAVE. Don’t think for a second that the current admin has forgotten! And I’m sure they wrote out their wind-down instructions long ago!
From our perspective, the only things that will hold them back from pushing everyone out of SAVE immediately are processing capacity concerns and their ability roll out the RAP plan…which is what they will tell most borrowers to switch to. This DOE has already shown that they will pull the trigger on things even if the capacity isn’t there. And RAP is guaranteed to go live by July 1st, at the latest.
What is our guidance?
We already recommended that many borrowers get out of SAVE a few months back once we started getting insight on the PSLF Buyback provisions. If you are still in it, stay the course for now. This ruling (or lack thereof) really throws things up in the air and DOE could take it any direction. I would be shocked if they didn’t release some sort of guidance in March. We’ll no more from there, and try to provide better guidance. Stay tuned!
Brandon Barfield is the President and Co-Founder of Student Loan Professor, and is nationally known as student loan expert for graduate health professions. Since 2011, Brandon has given hundreds of loan repayment presentations for schools, hospitals, and medical conferences across the country. With his diverse background in financial aid, financial planning and student loan advisory, Brandon has a broad understanding of the intricacies surrounding student loans, loan repayment strategies, and how they should be considered when graduates make other financial decisions.
