Court Dismisses ED’s SAVE Settlement, Leaving More Questions for Borrowers
By Maria Carrasco, NASFAA Staff Reporter
A federal court judge on Friday dismissed the Department of Education’s (ED) lawsuit and proposed settlement with the state of Missouri over terminating the Saving on a Valuable Education (SAVE) plan, leaving more questions and confusion for borrowers after years of legal challenges.
In December, ED originally announced its settlement agreement with Missouri to end the SAVE plan. As part of the settlement, which had not been finalized, ED agreed not to enroll any new borrowers in SAVE, to deny any pending applications, and to move all 7 million borrowers in the program into other repayment plans.
On Friday, in a court order, Judge John Ross of the U.S. District Court for the Eastern District of Missouri dismissed this settlement, arguing that there is “no longer a live case or controversy sufficient,” therefore, the court doesn’t have authority to enter a judgment. Ross also pointed out in the order that due to the enactment of the One Big Beautiful Bill Act (OBBBA), the SAVE plan will be terminated on July 1, 2028.
“Given the apparent lack of adversity between the parties, which has existed for many months, and their ability to mutually achieve the relief originally sought without further intervention from the Court, it appears that there is no longer a live case or controversy sufficient to authorize the Court to enter a judgment on the merits,” the order reads. “... What the parties seek is a ruling on the merits as to the validity of a rule no party intends to continue to defend, and which has effectively ended via congressional action.”
This order leaves many questions unanswered for borrowers after years of legal challenges to the program. The confusion persists because the court, in its dismissal, neither revived the SAVE plan nor struck it down; it simply stepped aside. Because the administration and the states now agree the plan should end, and Congress has already enacted a phase-out through OBBBA, the judge ruled there was no longer a legal dispute to resolve. The lack of a decision on the plan's legality keeps it technically “on the books” but frozen in practice, leaving borrowers in limbo until ED decides their next steps. While the program legally has to sunset by June 30, 2028, ED can still conduct negotiated rulemaking as soon as it's able to schedule it to eliminate the program before that date.
“While the court’s decision does not determine the ultimate fate of the SAVE plan, it also does little to resolve the uncertainty borrowers have faced for many months,” said Megan Walter, NASFAA’s senior policy analyst. “In light of this dismissal and given that the program is already scheduled to sunset under federal law, we encourage the department to move quickly to determine the path forward and to communicate clear timelines to borrowers. As these decisions are made, borrowers should be held harmless during any transition and given sufficient notice and support to understand their repayment options”.
Because the court did not rule on the merits, meaning the SAVE plan was declared neither lawful nor unlawful, it's unclear whether ED now has a clear legal obligation to restart implementing any of the plan’s benefits.
“It is not lost on the Court that millions of borrowers who enrolled in the SAVE plan have patiently awaited clarity while this litigation has proceeded,” a footnote of Ross’s court order reads. “However, that clarity must come from the Department of Education, and not from this Court, which is no longer empowered to weigh the merits of a case that is now moot.”
Last year, ED announced that it would convene a negotiated rulemaking committee to focus on removing the SAVE plan from federal regulations. ED has yet to release details on when this committee will take place.
This is a developing story. Stay tuned to Today’s News for more updates on the SAVE plan.
Publication Date: 3/2/2026
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