The legal battles surrounding the Saving on a Valuable Education (SAVE) plan are still in their early stages, and the timeline for resolution could be long and complex.
For borrowers, understanding the potential duration of the SAVE litigation forbearance is crucial as they navigate this uncertainty. Here’s why these lawsuits could drag on for years, potentially ending up in the Supreme Court.
Lawsuits Take Time to Resolve
While the challenges against the SAVE plan have just begun, federal lawsuits typically take a significant amount of time to resolve. On average, federal civil cases can take about one year to resolve, depending on the complexity of the case and the court’s schedule. However, this statistic includes dismissals and if we just look at cases that go to trial, resolution at the district court level takes on average two years.
For complex cases like the SAVE lawsuit, the timeline could extend even further, potentially exceeding two years.
Appeals and the Potential for a Supreme Court Hearing
After a district court decision, either party can appeal to the circuit court. If two circuits reach different conclusions, it creates a circuit split, making it more likely that the Supreme Court will review the case to ensure consistent legal interpretation nationwide.
Currently, there are two different lawsuits challenging the SAVE plan, each in a separate circuit, which increases the likelihood of divergent rulings.
The Supreme Court, however, is selective in the cases it hears. It receives approximately 7,000 petitions annually but typically accepts only about 100 to 150 of them. For a case to be heard, at least four of the nine justices must agree to grant a writ of certiorari. Cases that involve significant national issues or present unresolved questions of federal law—such as the extent of executive authority in creating repayment plans—have a higher chance of being reviewed. This is especially relevant for the SAVE litigation, given its similarity to previous student loan cases that went to the Supreme Court and the possibility of a circuit split.
How Long the Supreme Court Process Takes
If the Supreme Court agrees to hear a case, the timeline can extend considerably. From the time a case is accepted for review, it generally takes three to six months before oral arguments are heard, as both sides prepare their briefs. After oral arguments, the justices deliberate, and it often takes an additional three to six months for a decision to be issued, depending on the complexity of the case. Altogether, if the Supreme Court becomes involved, it can easily add another year to the case.
Where Is the Line Drawn?
The SAVE litigation isn’t just about student loan policies; it raises broader questions about the scope of presidential authority. The central issue is how much power Congress granted the executive branch to create or modify repayment plans. While previous plans like Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE) were established using similar statutory authority without judicial intervention, the SAVE plan’s scope is under closer scrutiny.
Most agree that there are limits. For instance, the President cannot unilaterally create a repayment plan that charges borrowers zero dollars per month for incomes below $3 million per year, with loan forgiveness after just five months. Such an extreme measure would effectively cancel all student debt, which would clearly exceed Congressional authority.
The question for the courts to decide is whether or not SAVE exceeds the authority granted by Congress.
How Long Will SAVE Litigation Forbearance Last?
Given the complexities outlined above, borrowers may face a lengthy period of uncertainty. The SAVE litigation forbearance—which pauses payments and interest accrual while legal challenges are pending—could last as long as the court process continues, potentially stretching several years if the case goes through multiple appeals and ends up before the Supreme Court.
While both parties in these cases will be interested in resolving the case quickly, given the high stakes, it could easily last three years before the cases are resolved.
Will the Election Impact the Lawsuit? The outcome of the 2024 election could impact how long the lawsuit lasts. A Harris administration would almost certainly continue to pursue the SAVE plan. A Trump administration may decide against moving forward with the lawsuit and start the process of unwinding the SAVE regulations.
What Does This Mean for Borrowers?
- Extended Uncertainty: Borrowers might experience long periods of financial ambiguity while waiting for a final resolution.
- Challenges in Financial Planning: The uncertainty around payment obligations makes it difficult to plan for major financial decisions.
- Staying Informed Is Key: Following legal developments can help borrowers prepare for different potential outcomes.
- Avoid Mistakes: Borrowers shouldn’t make extra payments during this forbearance as it won’t count toward forgiveness.
Conclusion
The SAVE litigation is likely to be a drawn-out battle, especially if the case proceeds through appeals and reaches the Supreme Court. While legal proceedings can be unpredictable, understanding the process can help borrowers make informed decisions and prepare for what lies ahead.
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During this freeze, does the time with no payments still count as time towards forgiveness if you need to hit 20/25 years for forgiveness?
Unfortunately, it does not. I’m hopeful that they might change the rule at the conclusion of the cases, but for those working toward IDR forgiveness, the Department of Education currently says that this time won’t count.
Thank you! Wasn’t sure.
Sounds like 8th Circuit wants to fit all ICR plans. Worst case scenario hitting ?
That hearing certainly could have gone better, but I don’t see the worst-case scenario happening. There are just too many protections from the APA to the MPN that should protect the older plans created under the ICR statute.