ST. LOUIS — A federal judge on Friday dismissed a proposed settlement between the Department of Education and the state of Missouri that sought to prematurely terminate the Saving on a Valuable Education (SAVE) plan. The ruling prevents the Trump administration from immediately dissolving the income-driven repayment (IDR) program, effectively maintaining a 2028 phase-out timeline and providing temporary relief to more than 7 million borrowers.
Procedural Deadlock Blocks Settlement
Judge John Ross of the U.S. District Court for the Eastern District of Missouri ruled that the court lacked the authority to approve the deal. The settlement, announced in December, was a joint effort by the Department of Education and Missouri officials to bypass lengthy regulatory hurdles and eliminate the Biden-era plan ahead of the schedule established by recent legislation.
In his decision, Judge Ross noted that because both the federal government and the state of Missouri were in total agreement, there was no longer a “live case or controversy” for the court to adjudicate.
“It appears that there is no longer a live case or controversy sufficient to authorize the Court to enter a judgment on the merits,” Ross wrote.
By dismissing the case as moot, the court effectively removed the legal shortcut the administration intended to use to shutter the program this year.
The “Big Beautiful” Timeline
The SAVE plan has been a primary target of President Donald Trump’s administration. The “One Big Beautiful Bill Act,” a sweeping budget reconciliation package signed into law in July 2025, already mandates the elimination of SAVE, along with the PAYE and ICR plans, by July 1, 2028.
However, the Department of Education had hoped to accelerate this process through the Missouri settlement. The department’s December proposal would have:
- Ceased all new enrollments immediately.
- Denied all pending applications.
- Involuntarily transitioned existing borrowers to alternative, and often more expensive, repayment plans.
With Friday’s dismissal, the department is now bound to the 2028 statutory deadline unless it pursues a new, months-long negotiated rulemaking process or obtains different court approval.
Borrowers Remain in Forbearance
The SAVE plan, which offered $0 monthly payments for low-income earners and a faster track to loan forgiveness, has been largely frozen since 2024 due to previous litigation. Most enrolled borrowers are currently in a non-interest-bearing forbearance.
Advocacy groups are now calling on the administration to honor the existing benefits of the plan following the court’s refusal to kill it early. “As of today, 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,” said Winston Berkman-Breen, legal director at Protect Borrowers.
What’s Next for Student Debt?
The Department of Education has stated it is “evaluating the court’s decision.” While the ruling is a victory for those seeking to delay the plan’s end, the long-term outlook remains unchanged. Under current law, all SAVE borrowers must transition to the Income-Based Repayment (IBR) plan or the new Repayment Assistance Plan (RAP) by the summer of 2028.
For now, the roughly 7 million people in the program can expect to remain in their current status until the department issues new guidance on how it will proceed without the settlement’s “back-room” shortcut.
