State of Missouri; State of Arkansas; State of Florida; State of Georgia; State of North Dakota; State of Ohio; State of Oklahoma v. Donald J. Trump, et al.; State of Missouri; State of Arkansas; State of Florida; State of Georgia; State of North Dakota; State of Ohio; State of Oklahoma v. Donald J. Trump, et al.
No. 24-2332; No. 24-2351
United States Court of Appeals For the Eighth Circuit
February 18, 2025
GRASZ, Circuit Judge.
Submitted: October 24, 2024
State of Missouri; State of Arkansas; State of Florida; State of Georgia; State of North Dakota; State of Ohio; State of Oklahoma
Plaintiffs - Appellees
v.
Donald J. Trump, in his official capacity as President of the United States; Denise L. Carter, in her official capacity as Acting Secretary, United States Department of Education; United States Department of Education1
Defendants - Appellants
Student Borrower Protection Center; National Consumer Law Center
Amici on Behalf of Appellants
State of Alaska; State of South Carolina; State of Texas; New Civil Liberties Alliance; Mackinac Center for Public Policy; Cato Institute
Amici on Behalf of Appellees
No. 24-2351
State of Missouri; State of Arkansas; State of Florida; State of Georgia; State of North Dakota; State of Ohio; State of Oklahoma
Plaintiffs - Appellants
v.
Donald J. Trump, in his official capacity as President of the United States; Denise L. Carter, in her official capacity as Acting Secretary, United States Department of Education; United States Department of Education
Defendants - Appellees
State of Alaska; State of South Carolina; State of Texas; New Civil Liberties Alliance; Mackinac Center for Public Policy; Cato Institute
Amici on Behalf of Appellants
Submitted: October 24, 2024
Filed: February 18, 2025
Before GRUENDER, ERICKSON, and GRASZ, Circuit Judges.
GRASZ, Circuit Judge.
This case, like Biden v. Nebraska, 143 S. Ct. 2355 (2023), concerns the authority of the President and Secretary of Education, under existing law, to forgive hundreds of millions of dollars of loans made to borrowers
Recognizing the important interests at stake, we carefully undertake the task of determining whether a preliminary injunction is warranted and, if so, the scope of that injunction. Like the district court, we conclude the states are likely to succeed in their claim that the Secretary‘s authority to promulgate ICR plans does not authorize loan forgiveness at the end of the payment period. 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 power Congress gave the Secretary in
I. Background
A. Federal Student Loan Repayment
In 1993, Congress authorized the federal government to directly issue loans to students for post-secondary education through the William D. Ford Federal Direct Loan program. See Student Loan Reform Act of 1993, Pub. L. No. 103-66, §§ 4011, 4021, 107 Stat. 341, 341-42 (codified as amended at
A decade after the Student Loan Reform Act, Congress expanded repayment options for low-income borrowers by creating an income-based repayment (IBR) plan to limit monthly payments for borrowers experiencing a “partial financial hardship.” See College Cost Reduction & Access Act, Pub. L. No. 110-84, § 203, 121 Stat. 784, 792-95 (2007) (codified as amended at
This appeal concerns the Secretary‘s recent promulgation of a revised ICR plan. Unlike IBR, the ICR statutory text does not provide a specific formula for calculating loan payments and does not explicitly state the Secretary can forgive loans. See
Since 1994, the Department of Education has established various ICR plans, known as ICR,2 Pay As You Earn (PAYE), and Revised Pay As You Earn
(REPAYE), the last of which has been amended into the program challenged here. Every ICR plan has provided for loan forgiveness of any remaining debt at the end of the established payment period of twenty or twenty-five years, depending on the plan and the borrower‘s loans. See William D. Ford Federal Direct Loan Program, 59 Fed. Reg. 61664, 61666, 61669 (Dec. 1, 1994) (to be codified at 34 C.F.R. pt. 685) [hereinafter ICR Rule]; Federal Perkins Loan Program, Federal Family Education Loan Program, & William D. Ford Federal Direct Loan Program, 77 Fed. Reg. 66088, 66139-40 (to be codified at 34 C.F.R. pts. 674, 682, 685) (Nov. 1, 2012) [hereinafter PAYE Rule]; Student Assistance General Provisions, Federal Family Education Loan Program, & William D. Ford Federal Direct Loan Program, 80 Fed. Reg. 67204,
B. SAVE Rule
In 2021, citing rising student loan debt, the Department of Education convened a committee to consider changes to rules governing ICR and IBR plans. The Secretary announced the proposed rule in January 2023 and published the final rule with minimal changes ten days after the Supreme Court struck down the Secretary‘s HEROES Act forgiveness plan. See Improving Income Driven Repayment for the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program, 88 Fed. Reg. 43820 (July 10, 2023) (to be codified at 34 C.F.R. pts. 682, 685) [hereinafter SAVE Rule]; Nebraska, 143 S. Ct. at 2362.
In comparison to earlier ICR and IBR plans, the SAVE plan protected more of a borrower‘s income by reducing the amount of income subject to loan payments, eliminated interest accrual, and expedited loan forgiveness for most borrowers. See SAVE Rule, 88 Fed. Reg. at 43901-03. Regarding payments and interest, SAVE offers more favorable terms than an eligible borrower would receive under IBR. It reduced the amount of income that was considered “discretionary” — a borrower‘s income up to 225% of the federal poverty line was excluded rather than 150% under IBR, PAYE, and the former REPAYE plans. See SAVE Rule, 88 Fed. Reg. at 43901-02. Then, it further lowered the portion of discretionary income a borrower with undergraduate loans would be required to pay monthly to one-twelfth of 5% of his discretionary income. Id. If the monthly payment amounts calculated under SAVE did not fully cover the accrued interest for that month, any remaining interest would not be charged to the borrower. Id. at 43902.
As to loan forgiveness, SAVE starts cancelling outstanding balances after 120 months of payments for any borrower whose “total original principal balance on all loans that are being paid under the [SAVE] plan was less than or equal to $12,000.” Id. at 43903. For each $1,000 above $12,000 for the total original balance, an additional twelve months of payments would be necessary for forgiveness. Id. After twenty years of payments for borrowers with only undergraduate loans or twenty-five years of payments for those with graduate loans, any remaining balance would be forgiven, regardless of the amount borrowed. Id. at 43902-03.
The impacts of these changes for loan repayment are substantial. Under prior ICR plans, “borrowers would repay approximately $11,800 per $10,000 of debt,” or $10,956 per $10,000 for borrowers with only undergraduate loans. Id. at 43880.
Undergraduate-only borrowers with “lifetime income in the bottom quintile are projected to repay $873 per $10,000” if enrolled in SAVE. Id. at 43881. Only borrowers in the top two quintiles of lifetime income could expect to pay more than they initially borrowed under SAVE. See id. Of the 7.5 million borrowers enrolled in SAVE as of February 2024, 4.3 million pay $0 monthly towards their loans under SAVE. Biden-Harris Administration Approves $1.2 Billion in Loan Forgiveness for Over 150,000 SAVE Plan Borrowers, U.S. Dep‘t of Educ. (Feb. 21, 2024), https://www.ed.gov/about/news/press-release/biden-harris-administration-approves-12-billion-loan-forgiveness-over [hereinafter Biden-Harris Administration Approves $1.2 Billion in Loan Forgiveness].
Although the SAVE Rule was set to take full effect on July 1, 2024, the Secretary designated several portions for early implementation, including forgiveness for borrowers with low initial principal balances. See SAVE Rule, 88 Fed. Reg. at 43820-21; Improving Income Driven Repayment for the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program, 89 Fed. Reg. 2489 (Jan. 16, 2024) [hereinafter Early Implementation of Forgiveness]. The Department started forgiving loans under SAVE in February 2024. Biden-Harris Administration Approves $1.2 Billion in Loan Forgiveness.
C. Procedural History
A group of seven states brought this challenge to the SAVE Rule in April 2024, seeking declaratory and injunctive relief and vacatur of the rule. They assert various provisions of the SAVE Rule exceed the Secretary‘s authority and are arbitrary and capricious. The states sought a stay or preliminary injunction against implementation of the SAVE Rule, and the district court granted their request in part, enjoining the loan forgiveness provisions of the SAVE Rule while leaving the remaining provisions in effect. After the injunction, the Department revived the pre-existing loan forgiveness provisions under REPAYE that the SAVE Rule had amended and continued forgiving loans after twenty or twenty-five years of payments. In response, the states requested the district court clarify that its preliminary injunction prohibited forgiveness under ICR plans, which the district court denied.
Both parties appealed, and the states sought an administrative stay and injunction pending appeal of the SAVE Rule and the revived forgiveness. We granted in part the states’ request, enjoining the federal officials “from any further forgiveness of principal or interest, from not charging borrowers accrued interest, and from further implementing SAVE‘s payment-threshold provisions.” Missouri v. Biden, 112 F.4th 531, 538 (8th Cir. 2024). The Supreme Court denied the federal officials’ application to vacate our injunction. Biden v. Missouri, No. 24A173, 145 S. Ct. 109 (2024). We then granted in part the federal officials’ motion for an expedited appeal.
On appeal, the federal officials assert the states lack standing and the district court erred in granting any injunction. The states seek a broadened injunction of the entire rule, contesting both the district court‘s assessment of the proper scope of preliminary relief and their likelihood of success on the merits of their other challenges to the rule.
II. Analysis
“We review the grant [or denial] of a preliminary injunction for abuse of
A. Standing
We first turn to the threshold question of standing to ensure we have jurisdiction over this case. See Steger v. Franco, Inc., 228 F.3d 889, 892 (8th Cir. 2000). Standing requires (1) that the plaintiff will “suffer[] an ‘injury-in-fact,’ (2) a causal relationship between the injury and the challenged conduct, and (3) that the injury likely will be redressed by a favorable decision.” Id. (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)). The states raise various theories to show they have standing. We agree with the district court that at least one state, Missouri, has standing to sue due to financial harms to the Higher Education Loan Authority of the State of Missouri (MOHELA), and its standing is sufficient to resolve this appeal.
As the Supreme Court previously held, Missouri suffers a cognizable financial harm when the Secretary enacts a plan that discharges student loans and closes accounts serviced by MOHELA. Nebraska, 143 S. Ct. at 2366. The SAVE Rule does so — it leads to loan forgiveness and closure of accounts serviced by MOHELA in as few as ten years of repayments. See SAVE Rule, 88 Fed. Reg. at 43902-03. Once an account is closed, MOHELA loses future fees for servicing the accounts, which reduces its profits and ability to fund education in Missouri. See Nebraska, 143 S. Ct. at 2366. Under the SAVE Rule, around 28,000 accounts held by MOHELA have already been closed, with 53,000 more identified as eligible for forgiveness. “This financial harm is an injury in fact directly traceable to the Secretary‘s plan” and redressable through the relief sought by the states. Id. Nevertheless, the federal officials assert Missouri lacks standing because the SAVE Rule provides some benefits to MOHELA and MOHELA has also requested some accounts it previously serviced be transferred to other loan servicers. We disagree.
First, we reject the federal officials’ offsetting-benefits argument. The federal officials argue the SAVE Rule reduces some of MOHELA‘s servicing costs because it “will cost almost nothing to service” any borrower whose payments are $0, and fewer accounts means the loan portfolio will be easier for MOHELA to manage. But once a plaintiff shows injury, we do not separately inquire whether the plaintiff gains some benefit from other portions of the regulation. See, e.g., NCAA v. Governor of New Jersey, 730 F.3d 208, 223 (3d Cir. 2013), abrogated on other grounds by N.J. Thoroughbred Horsemen‘s Ass‘n v. NCAA, 584 U.S. 453 (2018); Peters v. Aetna Inc., 2 F.4th 199, 218 (4th Cir. 2021); Texas v. United States, 809 F.3d 134, 155-56 (5th Cir. 2015), aff‘d by an equally divided court, 579 U.S. 547 (2016); Los Angeles Haven Hospice, Inc. v. Sebelius, 638 F.3d 644, 657 (9th Cir. 2011). “Our standing analysis is not an accounting exercise,” so the existence of some purported benefit from an injurious government action
We also are not swayed by the federal officials’ argument that MOHELA cannot claim injury by a loss in accounts it services because it had separately requested that certain accounts be transferred from it. It is true that in April 2024, MOHELA asked the Department “to transfer 1.5 million borrower accounts to one or more different loan servicers.” The facts surrounding this request to transfer are highly contested as to what accounts were implicated and the reasons for the request. According to the states, MOHELA‘s request primarily concerned accounts subject to the Public Service Loan Forgiveness (PSLF) program and changed loan servicing contracts under which these accounts were already set to be transferred to other servicers. Regardless of the exact circumstances, MOHELA‘s request to transfer some accounts cannot be construed as a request for most of its remaining accounts to close sooner. MOHELA serves 8.02 million borrowers, with 2.24 million accounts already enrolled in SAVE. While the federal officials estimate that approximately 5.25 million borrowers serviced by MOHELA would not be eligible for the shortest forgiveness timeline under the SAVE Rule, that still leaves nearly 3 million accounts that could be eligible, approximately double the amount MOHELA sought to have transferred. Moreover, these 5.25 million accounts could still be eligible for later forgiveness, depriving MOHELA of fees it would otherwise collect. The federal officials also fail to address the long-term financial impact of the SAVE Rule as new accounts enter repayment, enroll in SAVE, are assigned to MOHELA, and close sooner than they would without SAVE‘s forgiveness provisions. MOHELA‘s one-time request for transfer does not show MOHELA is not harmed by the continuous closure of accounts through forgiveness under SAVE.
In sum, we conclude MOHELA is harmed by the SAVE Rule, so Missouri has standing to sue. We therefore proceed to the merits of the preliminary injunction.
B. Preliminary Injunction
We consider four factors when evaluating a preliminary injunction: “(1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on the other parties litigant; (3) the probability that the movant will succeed on the merits; and (4) the public interest.” Wilbur-Ellis Co., 103 F.4th at 1355-56 (quoting Home Instead, Inc. v. Florance, 721 F.3d 494, 497 (8th Cir. 2013)). No factor is determinative but “the probability of success factor is the most significant.” Id. at 1356 (quoting Home Instead, Inc., 721 F.3d at 497). Ultimately, “[t]he primary function of a preliminary injunction is to preserve the status quo until, upon final hearing, a court may grant full, effective relief.” Id. at 1355 (quoting Rathmann Grp. v. Tanenbaum, 889 F.2d 787, 789-90 (8th Cir. 1989)). We conclude each factor supports a preliminary injunction.
We first consider the most important factor — whether the states have shown a probability of success on the merits. See id. at 1355-56. Ordinarily, a party need only show a “fair chance” of success on the merits, but if it requests an injunction of “government action based on presumptively reasoned democratic processes,” it “must show that [it] ‘is likely to prevail on the merits.‘” Eggers v. Evnen, 48 F.4th 561, 565 (8th Cir. 2022) (first quoting Rodgers v. Bryant, 942 F.3d 451, 455 (8th Cir. 2019); and then quoting Planned Parenthood Minn., N.D., S.D. v. Rounds, 530 F.3d 724, 732-33 (8th Cir. 2008) (en banc)). We assume, as the parties do, the heightened standard applies to preliminary injunctions of agency rulemakings. See Firearms Regul. Accountability Coal., Inc. v. Garland, 112 F.4th 507, 517 (8th Cir. 2024). The states assert the SAVE Rule exceeds the Secretary‘s authority on multiple fronts. We agree with the district court that the states are likely to succeed in their claim that the Secretary cannot forgive loans through an ICR plan. It is unnecessary to reach their remaining claims at this stage.
The states’ challenge is one of statutory interpretation. We start with “the statute‘s plain language,” looking to “the meaning that proper grammar and usage would assign” the text. United States v. Lester, 92 F.4th 740, 742 (8th Cir. 2024) (quoting United States v. Moreira-Bravo, 56 F.4th 568, 571 (8th Cir. 2022)). We “must give effect, if possible, to every clause and word of a statute” and “look to the structure of the statute and the language surrounding the term to ascertain its meaning.” United States v. Zam Lian Mung, 989 F.3d 639, 642-43 (8th Cir. 2021) (first quoting Loughrin v. United States, 573 U.S. 351, 358 (2014); and then quoting United States v. Kowal, 527 F.3d 741, 746 (8th Cir. 2008)). If the text is clear, “the judicial inquiry must end.” Lester, 92 F.4th at 742 (quoting United States v. Jungers, 702 F.3d 1066, 1069 (8th Cir. 2013)). The court must aim to determine the statute‘s “best meaning” by “deploying its full interpretative toolkit.” See Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244, 2271 (2024).
The federal officials primarily rest their authority to forgive student loans at the end of the ICR payment period on
At the time ICR was first codified, the statute had four generally applicable options for borrowers to repay “principal and interest” on their loans:
- a standard repayment plan with a fixed payment made over a set number of years, not to exceed ten years;
- an extended repayment plan with a fixed annual repayment amount paid over an extended period of time;
- a graduated repayment plan, “with annual repayment amounts established at 2 or more graduated levels and paid over a fixed or extended period of time, except that the borrower‘s scheduled payments shall not be less than 50 percent, nor more than 150 percent, of what the amortized payment on the amount owed would be if the loan were repaid under the standard repayment plan“; and
- an income contingent repayment plan, with varying payments based on income paid over an extended time period, not to exceed twenty-five years.
See
No one disputes the first three repayment plans in section 1078e(d)(1) require the loans to be repaid in full by the end of the payment period. The Secretary does not claim, for example, the standard repayment plan would authorize her to establish fixed monthly payments of $5 for ten years before discharging a $100,000 loan balance. Instead, the fixed monthly payments of the standard plan are designed such that a borrower makes monthly payments of an amount high enough for the loan to be repaid within ten years. After all, these are repayment plans — plans to repay or return lent money. See Repayment, Oxford English Dictionary (2009); Repayment, Webster‘s Third New International Dictionary (2002). Thus, for each, the Secretary starts with the loan balance and determines payments to satisfy full repayment of the loan under the terms of the plan. In the standard repayment plan, the borrower pays a fixed sum calculated to ensure full payment by the end of the payment period.
None of the preceding repayment plans include the word “full” but they undisputedly anticipate full repayment. See
The federal officials claim this approach would “establish[] a student-loan repayment plan that would end in a borrower‘s default.” This assumes the Secretary administers an ICR plan in a way that does not ensure the borrower‘s ICR payments result in loan payoff at the end of the period. ICR would not result in default for most borrowers if the Secretary requires a sufficient portion of the borrower‘s income to be paid towards the loan to ensure full payment. And Congress provided safeguards if a particular borrower‘s payment would be too burdensome or insufficient: an alternative, case-by-case repayment plan or, in later amendments, IBR. The alternative repayment plan allows the Secretary to
provide, on a case by case basis, an alternative repayment plan to a borrower of a loan made under this part who
demonstrates to the satisfaction of the Secretary that the terms and conditions of the repayment plans available under paragraph (1) are not adequate to accommodate the borrower‘s exceptional circumstances.
IBR similarly protects eligible borrowers by effectively enacting a statutory limit on how much of their income they would have to dedicate to loan repayment. See
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. See
The federal officials’ remaining arguments are unable to overcome the plain text and context of
The federal officials also cite amendments to section 1087e(e) requiring the Department to count periods of deferment based on economic hardship toward the ICR borrower‘s maximum repayment period as supporting their argument that ICR allows loan forgiveness. See
Even if the federal officials’ interpretation were plausible, we would expect greater textual or contextual clues than the ones here to suggest the Department has the authority to forgive loans under ICR rather than to build a payment schedule for repayment by the end of the payment period. See Nebraska, 143 S. Ct. at 2372-75. 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. After all, if Congress had given that power through ICR, creating IBR and requiring low-income borrowers to make payments for twenty or twenty-five years to obtain forgiveness would have been unnecessary. The separate program for loan forgiveness in ten years for public service employees would similarly be superfluous. See
even greater economic impact than the sweeping loan forgiveness program attempted through the HEROES Act, which the Supreme Court recognized as an attempt “to exercise control over ‘a significant portion of the American economy.‘” See Nebraska, 143 S. Ct. at 2373 (quoting Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014)).
As with the previous attempt at loan forgiveness, the major questions doctrine informs our analysis. We assume Congress would have provided clear signs if it authorized such significant power to the Secretary. See id. It did not. By creating the ICR plan, Congress simply created a different method to calculate payments to repay student loans. The states are therefore likely to succeed in their challenge to the SAVE Rule‘s forgiveness provision.
2. Irreparable Harm
The district court concluded the states showed irreparable harm through MOHELA‘s lost servicing fees. We agree. Irreparable harm exists “when a party has no adequate remedy at law, typically because its injuries cannot be fully compensated through an award of damages.” Gen. Motors Corp. v. Harry Brown‘s, LLC, 563 F.3d 312, 319 (8th Cir. 2009). Once accounts are closed through SAVE‘s forgiveness provisions, they cannot be reopened, and MOHELA will permanently lose any future fees. Missouri cannot recoup that financial loss through a damages award because of sovereign immunity, so this constitutes an irreparable injury. See Iowa Utils. Bd. v. FCC, 109 F.3d 418, 426 (8th Cir. 1996).
Nevertheless, the federal officials assert we should ignore this harm because the states waited until nine months after the SAVE Rule was published and three months after the Secretary announced early implementation of forgiveness to seek an injunction. The district court did not abuse its discretion in concluding the states’ delay did not warrant denying injunctive relief. The notice of early implementation of forgiveness was not published until January 2024, only three months prior to the states’ motion. Early Implementation of Forgiveness, 89 Fed. Reg. at 2489. While some forgiveness started prior to the request for a preliminary injunction, including some accounts held by MOHELA, many more accounts that could be forgiven under the SAVE Rule had not yet been processed. Moreover, the continual nature of accounts becoming eligible for forgiveness each month under the SAVE Rule indicates that the greatest harm from implementation of the rule is yet to occur. Under these circumstances, the states’ brief delay does not undermine their claim of irreparable harm.
3. Balance of the Equities and Public Interest
The balance of the equities and the public interest also support a preliminary
C. Scope of Relief
Finally, having determined a preliminary injunction is appropriate, we turn to the parties’ dispute over the proper scope of relief. The district court blocked the SAVE Rule‘s early forgiveness provision nationwide. The federal officials request we narrow the district court‘s injunction to cover only loans held by MOHELA, while the states assert we should broaden the injunction to preclude the entire SAVE Rule and the restoration of the REPAYE forgiveness provisions. We conclude the district court correctly did not limit its injunction to MOHELA but erred by not preliminarily enjoining the entire rule and the resurrected REPAYE forgiveness.
First, “an injunction limited to the plaintiff States, or even more broadly to student loans affecting the States, would be impractical and would fail to provide complete relief to the plaintiffs.” Nebraska, 52 F.4th at 1048. A servicer-dependent injunction would create chaos and uncertainty for borrowers and be difficult to administer because loan accounts can shift between servicers. Through a process called rebalancing, the Department can move student loan accounts from one servicer to another. A borrower could spend nine years living in Kansas, paying off loans thinking he would obtain forgiveness, only to move to Missouri in year ten or have his accounts shifted to MOHELA and no longer be eligible under the federal officials’ preferred approach. Furthermore, reducing the overall number of existing loans by forgiving loans held by other servicers creates the risk that rebalancing reduces the accounts held by MOHELA. With fewer accounts, MOHELA would ultimately incur the same loss of its servicing fees, albeit indirectly. A nationwide injunction is no more burdensome on the federal officials than necessary and is more workable. See id.
Second, we conclude the entire SAVE Rule must be preliminarily enjoined. Upon ultimate success in an Administrative Procedure Act challenge, the default remedy is to set aside or vacate the rule. See Data Mktg. P‘ship v. U.S. Dep‘t of Lab., 45 F.4th 846, 859 (5th Cir. 2022); United Steel v. Mine Safety & Health Admin., 925 F.3d 1279, 1287 (D.C. Cir. 2019). In certain circumstances, portions of a rule can be severed if doing so would “not impair the function of the statute as a whole, and there is no indication that the regulation would not have passed” had the unlawful provision not been included. See K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 294 (1988). Otherwise, the entire rule rises and falls with its challenged provisions. See Carlson v. Postal Regul. Comm‘n, 938 F.3d 337, 351 (D.C. Cir. 2019). Considering these principles, the default scope of preliminary relief should apply to the rule as a whole unless the offending provision is severable.
Here, the district court enjoined only the forgiveness provision after concluding the remainder of the rule “can function sensibly” without forgiveness. We conclude otherwise. As the federal officials themselves argue, “it would make little sense for an ICR plan to end in default,” which is what will happen for most borrowers enrolled in SAVE if forgiveness is enjoined while other provisions like the payment provisions remain in effect. The Secretary‘s estimates detail how most borrowers repaying under SAVE will not repay even the principal of their loans if they follow the prescribed payment plan. SAVE Rule, 88 Fed. Reg. at 43880-81. Consequently, if forgiveness is enjoined, those borrowers will default at the end of the payment period unless they are able to pay the entire outstanding balance at once. Given the repeated references in the SAVE Rule of its aim to avoid default, e.g., id. at 43820, 43822-24, 43826, there is strong evidence the regulation would not have been promulgated in the absence of a forgiveness provision. Even in the SAVE Rule‘s discussion of how various provisions could function independently, the Secretary did not claim she would implement these regulations absent forgiveness of loans. See id. at 43828-29. The forgiveness provisions undergird the entire SAVE plan and therefore are not severable. Enjoining forgiveness necessitates enjoining the entire rule.
Finally, we turn to the hybrid rule, which the federal officials implemented after the district court enjoined the SAVE Rule‘s forgiveness provisions. Essentially, the federal officials resuscitated the forgiveness provisions of the 2015 REPAYE Rule to fill in the gap created after the SAVE Rule‘s forgiveness was enjoined, relying on it to continue the same, likely unlawful, action the district court had enjoined. Generally, in the absence of “special circumstances,” “prior regulations remain valid until replaced by a valid regulation or invalidated by a court.” Menorah Med. Ctr. v. Heckler, 768 F.2d 292, 297 (8th Cir. 1985). Under this principle, the pre-amendment REPAYE forgiveness provision could be reinstated as the Secretary did here. However, we find this case presents such special circumstances, namely the portion of the old rule the federal officials seek to revive suffers from the same legal errors as the one challenged here — the Secretary lacks the power to authorize loan forgiveness in an ICR plan. We therefore conclude the district court‘s injunction should be broadened to enjoin the Secretary‘s attempt to forgive loans in the SAVE plan through the old REPAYE provisions.
III. Conclusion
In sum, we affirm the district court‘s entry of a preliminary injunction and remand for further proceedings and with instructions to modify the preliminary injunction to enjoin the entire SAVE Rule as well as the hybrid rule. The injunction pending appeal imposed by our order of