128 F.4th 979
8th Cir.2025Background
- The case challenges the Department of Education's "Saving on a Valuable Education (SAVE)" Rule, which revised income contingent repayment (ICR) plans for federal student loans by lowering payment thresholds, halting interest accrual, and forgiving loan balances after as little as ten years.
- Seven states sued, arguing the Secretary of Education exceeded statutory authority, as the statute does not allow for loan forgiveness under ICR plans.
- The district court partially agreed, enjoining the early loan forgiveness provisions but allowing the rest of the rule to stand; both sides appealed.
- The Eighth Circuit found at least Missouri had standing due to financial harm to its student loan servicer, MOHELA, from lost servicing fees when loans were forgiven and accounts closed.
- The court analyzed the likelihood of success, irreparable harm, balance of equities, and public interest, ultimately finding all favored a preliminary injunction against the department's actions.
- The Eighth Circuit expanded the injunction to cover the entire SAVE rule as well as any resurrected loan forgiveness provisions under prior ICR plans, remanding for modification of relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to Forgive Loans under ICR | Statute does not authorize loan forgiveness via ICR; only repayment is permitted. | Secretary has discretion to forgive remaining balances after income-based payments. | Secretary's authority does not extend to loan forgiveness under ICR; rule exceeds statutory authority. |
| Standing (MOHELA Harm) | State is harmed by lost servicing fees when accounts are closed. | MOHELA benefits from cost savings and requested account transfers, so harm is offset. | Missouri (through MOHELA) has standing due to direct financial harm. |
| Scope of Injunction | Injunction should block entire SAVE rule and revival of prior forgiveness provisions. | Injunction should be limited to MOHELA-held loans and not nationwide. | Nationwide injunction appropriate to provide complete relief; entire rule and prior forgiveness provisions enjoined. |
| Irreparable Harm and Public Interest | Without injunction, harm to MOHELA is irreparable; unlawful agency action harms public. | Borrowers would be hurt by injunction; delay undermines claim of irreparable harm. | Harm to MOHELA and unlawfulness outweigh harm to borrowers; delay not fatal. |
Key Cases Cited
- Biden v. Nebraska, 143 S. Ct. 2355 (Supreme Court held that forgiving large amounts of federal student loan debt exceeded statutory authority)
- Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (Supreme Court clarified standards for agency statutory interpretation and application of the major questions doctrine)
- Rathmann Group v. Tanenbaum, 889 F.2d 787 (Eighth Circuit explained purpose of a preliminary injunction is to preserve the status quo)
- K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (Supreme Court addressed severability of agency regulations)
- NCAA v. Governor of New Jersey, 730 F.3d 208 (Third Circuit examined standing when plaintiff suffers both harms and benefits from challenged action)
- Iowa Utilities Board v. FCC, 109 F.3d 418 (Eighth Circuit discusses irreparable harm where sovereign immunity blocks damages remedy)