8th Circuit Court of Appeals Expands Preliminary Injunction and Blocks Final Rule (SAVE) and Interim Rule (IDR Forgiveness-REPAYE)

https://www.reuters.com/legal/us-appeals-court-blocks-biden-era-student-debt-relief-plan-2025-02-18/

The 8th Circuit Court of Appeals just affirmed the district court's preliminary injunction AND expanded it to block ALL of the SAVE rule [Improving Income Driven Repayment for the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program] published on 07/10/2023 AND the interim rule that revived forgiveness under the REPAYE plan.

This rule includes all of the following:

  • Expand access to affordable monthly Direct Loan payments through changes to the Revised Pay-As-You-Earn (REPAYE) repayment plan, which may also be referred to as the Saving on a Valuable Education (SAVE) plan;
  • Align the definition of “family size” in the FFEL Program with the definition of “family size” in the Direct Loan Program;
  • Increase the amount of income exempted from the calculation of the borrower's payment amount from 150 percent of the Federal poverty guideline or level (FPL) to 225 percent of FPL for borrowers on the REPAYE plan;
  • Lower the share of discretionary income used to calculate the borrower's monthly payment for outstanding loans under REPAYE to 5 percent of discretionary income for loans for the borrower's undergraduate study and 10 percent of discretionary income for other outstanding loans; and an amount between 5 and 10 percent of discretionary income based upon the weighted average of the original principal balances for those with outstanding loans in both categories;
  • Provide a shorter maximum repayment period for borrowers with low original loan principal balances;
  • Eliminate burdensome and confusing regulations for borrowers using IDR plans;
  • Provide that the borrower will not be charged any remaining accrued interest each month after the borrower's payment is applied under the REPAYE plan;
  • Credit certain periods of deferment or forbearance toward time needed to receive loan forgiveness;
  • Permit borrowers to receive credit toward forgiveness for payments made prior to consolidating their loans; and
  • Reduce complexity by prohibiting or restricting new enrollment in certain existing IDR plans starting on July 1, 2024, to the extent that the law allows.

This means that the SAVE payment plan is likely going away completely, and there will no forgiveness on any loans unless they are enrolled in the IBR plan or through the PSLF. Additionally, this final rule that is now completely blocked also allowed for the one-time payment count adjustment towards forgiveness.

The Dept of ED could now undo the payment count adjustments for anyone who did not already get forgiveness in PSLF or otherwise.

Let me clarify, I am not saying that they are going to roll back the adjustment. I am just pointing out that that since the appeals court expanded the preliminary injunction to block the entire rule and not just forgiveness, they can roll it back now, if they want to.

I definitely hope this is not the case but I am not optimistic because this administration is trying to slash funding everywhere. So this would be an easy way to roll back millions in UPCOMING student loan forgiveness based on the payment count adjustments.

One more note: All IDR forgiveness is currently enjoined. The only way to get forgiveness now is the IBR plan and/or PSLF.

EDITED for clarity