Since the inauguration of Donald Trump for a second presidential term, a student loan borrower has fallen into default every nine seconds. A federal appeals court wants to accelerate that process.

Last week, a three-judge panel of the Eighth Circuit (which includes two Trump appointees and one appointed by George W. Bush) nullified the Biden administration’s income-driven repayment (IDR) program, versions of which have been in place under presidents of both parties for over three decades. The specific Biden-era version, known as Saving on a Valuable Education (SAVE), which nearly seven million borrowers have opted into, was authorized through 2028 by Congress and President Trump in the fiscal mega-bill passed just last year. Yet without any hearing on the merits, the Eighth Circuit unilaterally tossed out the program.

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Since the Supreme Court’s ruling in Loper Bright put an end to the deference courts gave to regulatory agencies to interpret ambiguous statutes (which was known as the Chevron doctrine), there’s been an abiding fear that judges would now be able to determine entire sections of the law at their discretion. But even the most jaundiced court observer wouldn’t have been prepared for how the Eighth Circuit Court of Appeals is now operating. “This is the right-wing judiciary flexing its muscle in a way that we haven’t ever seen before,” said Mike Pierce, a former Consumer Financial Protection Bureau official and executive director of the advocacy organization Protect Borrowers. “This was not even a question presented to the judges. They just said, ‘We don’t like this so you can’t do it.’”

Perhaps the most interesting part of this saga is the reluctance of Trump and his Department of Education to follow the court’s orders, thereby keeping borrowers from having to resume payments. “Nobody wants to be seen jacking up costs on student loan borrowers in 2026,” Pierce said. “Donald Trump doesn’t want to send Republicans to the polls as the debt collector-in-chief.” Yet right-wing state attorneys general and courts drunk on their own power may force the issue.

“Donald Trump doesn’t want to send Republicans to the polls as the debt collector-in-chief.”

The case dates back to 2024. The SAVE program cut monthly payments from 10 percent of discretionary income to 5 percent, with full debt forgiveness after between 10 and 20 years, depending on the size of the loan. This wasn’t debt cancellation, which President Biden was also pursuing, but a new version of a repayment plan that had been in place since 1994, with no legal challenges whatsoever. Indeed, IDR’s intellectual father was none other than Milton Friedman. Yet two groups of Republican attorneys general sued to block SAVE anyway, and both successfully got parts of it blocked, on the grounds that Congress didn’t explicitly authorize some facets of the plan. In the summer of 2024, the Eighth Circuit went further and imposed a broad injunction, ruling in the face of more than 30 years of evidence that IDR oversteps presidential authority.

None of this went to the merits; the Eighth Circuit simply decided that if presented with the case, they would likely strike it down, and therefore it put in place the injunction to prevent harms. But after the election, the Justice Department and the Republican attorneys general, the adversaries in the case, asked the district court hearing it in Missouri to pause while they worked out a negotiated settlement. The idea was that the Big Beautiful Bill Act would deal with student loans and probably toss out SAVE anyway, so court action wasn’t needed.

That isn’t what happened. Republicans ran headlong into the dreaded Senate parliamentarian, who disallowed a repeal of the explicit legal authority for IDR through the budget reconciliation process. What the parliamentarian does allow is a phased-in sunset, whereby SAVE would remain in place until 2028. In other words, after the Eighth Circuit ruled, Congress ratified the legal authority to do IDR plans like SAVE by enacting Trump’s Big Beautiful Bill.

At that point, the Republican attorneys general and the Trump Justice Department reached a settlement that would vacate the challenge to the SAVE plan. They never showed the settlement to the trial court judge but jointly asked that he affirmatively cancel SAVE, since neither the AGs nor Trump wanted to continue a Biden-devised program. Reasonably, the judge said that since he isn’t party to a settlement he hasn’t seen, and there’s now no “live case or controversy” since the parties settled the matter, he would dismiss the case. That put SAVE into effect, and should trigger the automatic discharge of debts for borrowers who already made the necessary IDR payments in the past, as a lawsuit from borrowers indicated.

Trump’s Education Department could easily create a new regulation and eliminate SAVE, or change it to their preferred repayment plan, just as past presidents (including Trump, in his first term) have done. But that would put them on the hook for increasing borrower costs. “It’s easier to blame a judge,” Pierce said. “They want the judge to do their dirty work.”

But the district court judge wouldn’t play the role. So the Republican attorneys general appealed the dismissal of the case to the Eighth Circuit. And even though the AGs were only asking for temporary relief, the Eighth Circuit went a step further, telling the district court in a one-paragraph order that it must vacate the SAVE rule and its orders of “final relief.” The district court complied. So while no facts had been shown to a court, and the Education Department never repealed SAVE, the plan was dead.

The Quietest Government Shutdown

In practice, this should mean that the seven million borrowers who enrolled in SAVE and have been in limbo since 2024, with their loan payments and debt collection paused due to the litigation uncertainty, will have to pay once again (presumably through a previous IDR system, though that’s unclear). But that’s where this story takes another twist. More than a week after the Eighth Circuit ruling, the Education Department has not announced a resumption of payments. The department did not respond to a request for comment.

The secretary of education has the authority to pause payments in perpetuity for any reason, regardless of the court cases. Accordingly, this is an instance where defying the court is sort of legal. And the Trump administration appears to prefer such defiance. The one precedent here is that last December, Education Secretary Linda McMahon attempted to restart involuntary debt collection on student loans by garnishing wages and diverting tax refunds, and the White House apparently overruled her. The administration clearly has no interest in burdening millions of student loan borrowers further at a time when gas prices are skyrocketing, inflation is rising, and the economy is on the precipice. Will right-wing attorneys general now sue Donald Trump to enforce the law?

In the meantime, student debtors are trying to intervene in the case to save SAVE, by asking the district court to reconsider the final order. “If the Administration wants to raise monthly student loan payments by hundreds of dollars for my clients and the millions of Americans like them, it should do that through the appropriate legal process,” said Austin Hinkle of Public Goods Practice, who filed the case.

That’s a telling quote. The conservative movement absolutely wants student loan borrowers to pay more every month. The White House thinks it would be bad politically. The Education Department is silent. The courts want to continue their untrammeled takeover of the administrative state. And seven million borrowers are caught in the middle of this tug-of-war.

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David Dayen is the executive editor of The American Prospect. He is the author of Monopolized: Life in the Age of Corporate Power and Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud. He co-hosts the podcast Organized Money with Matt Stoller. He can be reached on Signal at ddayen.90.