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Legal action over a key student-loan repayment plan continues to mount — and this time it's about debt relief.On Monday, four student-loan borrowers, represented by law firm Public Goods Practice, filed a lawsuit against the Department of Education calling for "immediate" relief for borrowers enrolled in the SAVE plan.
The SAVE plan, created by former President Joe Biden and intended to allow cheaper payments and a shorter timeline to debt relief, has been blocked since the summer of 2024 due to litigation. However, a court declined to rule on President Donald Trump's proposed settlement that would have eliminated SAVE, and the borrowers said in their lawsuit that it means the department should process debt relief for eligible borrowers through the plan."The government is required to grant immediate relief to borrowers eligible for loan discharge and begin implementing the other provisions of the SAVE Final Rule," the lawsuit said. "However, the government has made clear in court filings, public statements, website language, and borrower-specific denials or non-processing, that it is refusing to administer relief required under operative law and regulation."The Department of Education did not immediately respond to a request for comment from Business Insider. It previously said that it was reviewing the court's decision following the proposed settlement ruling.The lawsuit said that one of the plaintiffs, Heather Havens, is enrolled in SAVE and eligible to have two of her loans discharged after making 303 payments out of the required 300. If she changed repayment plans, she would still be eligible for relief, but the effective date would be the month she enrolled in the new repayment plan — not when she became eligible through SAVE.That means that her loan forgiveness would be taxable since a 2021 provision in the American Rescue Plan that expired at the end of 2025 made student-loan forgiveness tax-free.In addition to immediate relief for eligible borrowers, the lawsuit is also asking the department to allow borrowers who left the SAVE plan while it was blocked the option to reenroll and receive relief.A group of Democratic lawmakers recently pushed for the relief sought in the lawsuit. On March 4, Sens. Jeff Merkley and Bernie Sanders led some of their colleagues in calling for the department to process SAVE relief. They wrote in their letter that they're calling on the department "to implement the benefits of the SAVE plan and administer loan cancellation for borrowers on the SAVE Plan who are eligible for such relief immediately."While the fate of SAVE borrowers remains uncertain, the department is moving forward with its broader student-loan repayment overhaul in Trump's "big beautiful" spending legislation. The changes, which will begin in July, include new repayment plans, borrowing caps on advanced degrees, and phasing out the SAVE plan in the summer of 2028.Have a story to share? Contact this reporter at asheffey@businessinsider.com.
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