State of Missouri v. Trump, No. 24-2332 (8th Cir. 2025): SAVE Student Loan Plan

The Eighth Circuit Court of Appeals ruled against the Biden administration’s Saving on a Valuable Education (SAVE) plan, declaring that the Department of Education exceeded its authority in implementing broad student loan forgiveness through an income-contingent repayment (ICR) plan.

  • Lack of Statutory Authority: The court found that 20 U.S.C. § 1087e(d)(1)(D), which authorizes ICR plans, does not permit loan forgiveness. Instead, repayment plans must be structured to ensure borrowers eventually repay their full loan balance, not receive forgiveness after a set number of years.
  • Comparison to Previous Loan Plans: Other repayment programs, such as Income-Based Repayment (IBR), explicitly include forgiveness provisions in their statutory language. Congress did not provide similar language for ICR plans, meaning the Secretary of Education does not have the authority to create forgiveness within ICR.
  • Major Questions Doctrine: The court applied the major questions doctrine, ruling that loan forgiveness on this scale requires clear congressional approval, which was absent.
  • Biden v. Nebraska Precedent (2023): Similar to the Supreme Court’s decision striking down the HEROES Act loan forgiveness plan, the court ruled that the executive branch cannot unilaterally cancel debt without explicit legislative authorization.

Said the Court:

On the Lack of Statutory Authority for Loan Forgiveness: “The statute’s text and structure require ICR plans to be designed for a borrower to pay his or her loan balance in full through payments that can fluctuate based on income during the payment term. The Secretary has gone well beyond this authority by designing a plan where loans are largely forgiven rather than repaid.”

On the Application of the Major Questions Doctrine:   “We are hard-pressed to conclude that Congress, by directing the Secretary to enact a repayment plan with varying payments based on income over a period not exceeding twenty-five years, believed it authorized the Secretary to wipe out any remaining principal or interest of any borrower in as few as ten years of low or no payments.”

On the Need for Congressional Authorization: “Rather than implying by omission or other ambiguities, Congress has spoken clearly when creating a repayment plan with loan forgiveness or otherwise authorizing it—explicitly stating the Secretary should cancel, discharge, repay, or assume the remaining unpaid balance. The statutory text enabling the creation of an ICR plan provides no comparable language.”

As a result, the court invalidated the SAVE plan in its entirety and blocked efforts to restore previous ICR-based forgiveness provisions.

Image courtesy of Flickr and Brittany Hogan.