Missouri

A three-judge Eighth Circuit panel reversed Judge Ross and directed the district court to enter the final judgment the department and Missouri had jointly requested, vacating nearly all of the SAVE rule. The department said guidance for SAVE borrowers would follow within weeks.

Judge John Ross of the Eastern District of Missouri dismissed the lawsuit and the proposed settlement, finding no live controversy because both sides now wanted SAVE gone and Congress had already scheduled its end for July 1, 2028. The order neither revived nor struck down SAVE, leaving seven million enrollees in limbo and prompting a separate borrower suit demanding the plan be implemented.

Rather than litigate to judgment, the department and Missouri Attorney General Catherine Hanaway proposed a joint settlement under which the department would enroll no new borrowers in SAVE, deny pending applications and move all enrollees into other plans. The department put SAVE's ten-year cost at more than $342 billion and said more than seven million borrowers were still in the forbearance.

The U.S. Court of Appeals for the Eighth Circuit affirmed the preliminary injunction against SAVE and told the district court to broaden it to the whole rule plus the revived REPAYE forgiveness provisions, holding that the states were likely to prove the Secretary of Education cannot forgive loans at the end of an income-contingent repayment plan. The ruling put the legality of PAYE and ICR forgiveness in doubt too, and the department pulled the online income-driven repayment application a week later.