On February 27, a judge in the U.S. District Court for the Eastern District of Missouri dismissed without prejudice as moot a lawsuit challenging the Department of Education’s “Savings on Valuable Education” (SAVE) plan, a revised income-contingent repayment program for certain federal student loan borrowers. The plaintiff states had filed the case in April 2024 alleging that the secretary of Education lacked statutory authority to forgive loans under such a repayment plan. As previously covered by InfoBytes, in June 2024, the district court issued a preliminary injunction halting further loan forgiveness under the plan after finding plaintiffs likely to succeed on the merits.
The dispute proceeded with cross-appeals, and the 8th Circuit affirmed and broadened the injunction to block not only loan forgiveness but also the final rule, as well as a hybrid rule designed to revive forgiveness on pre-amendment timelines. Following the shift in presidential administration, the incoming administration ceased defending the rule, and Congress passed the One Big Beautiful Bill Act in July 2025, effectively ending the SAVE plan with a phase-out period. Subsequently, and at issue here, both parties jointly asked the court to enter final judgment vacating the SAVE plan.
The district court’s opinion stated that both parties, in their joint motion, agreed that further litigation would serve no useful purpose and had negotiated a settlement but noted its terms were not submitted to the court. Citing Article III’s requirement for a live controversy between adverse parties, the court concluded it lacked jurisdiction to rule on the merits of a case where both sides seek the same outcome and where the challenged rule was already defunct through legislative action. The court emphasized in a footnote that clarity for borrowers must come from the Department of Education rather than a federal court issuing advisory opinions in a moot case.
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