On Thursday, a federal appeals court issued an order temporarily halting the Biden administration from implementing its new student loan repayment plan, known as the SAVE (Saving on a Valuable Education) plan.
βWe are assessing the impacts of this ruling and will be in touch directly with borrowers with any impacts that affect them,β an Education Department spokesperson stated.
The St. Louis-based 8th U.S. Circuit Court of Appeals appears to have blocked the entire SAVE plan, according to higher education expert Mark Kantrowitz. Previously, only parts of the plan were on hold amid numerous legal challenges to the relief program.
Legal Troubles Surrounding the SAVE Plan
The Biden administration introduced the SAVE plan in the summer of 2023, promoting it as βthe most affordable student loan plan ever.β The terms of this new income-driven repayment plan are the most generous to date, making it a controversial topic among critics of debt forgiveness. So far, around 8 million borrowers have signed up for SAVE, according to the White House.
The SAVE plan includes two key provisions that have been the focus of legal challenges: it offers lower monthly payments than any other income-driven repayment plan, and it leads to quicker debt erasure for those with small balances.
In late June, two federal judges in Kansas and Missouri temporarily halted those parts of the SAVE plan after several red states argued that the Education Department overstepped its authority and was attempting to find a roundabout way to forgive student debt following the Supreme Courtβs decision to block its sweeping plan in June 2023.
The Biden administration successfully appealed the injunction against SAVE that prevented it from lowering borrowersβ payments, but it now faces another potential block from doing so again. Before Thursdayβs ruling, the expedited forgiveness provision was still on hold.
Prior to the legal challenges, the Education Department had already forgiven $5.5 billion in student debt for 414,000 borrowers through the SAVE Plan.
As the situation develops, the Education Department is expected to communicate directly with borrowers about any changes that might affect them.
Matt Pinner is a dedicated journalist for WVPrepBB.com, specializing in USA and crime news. With a keen eye for detail and a passion for uncovering the truth, Matt brings timely and insightful reporting to his readers. His work on WVPrepBB.com keeps the community informed and engaged with the latest developments in national news and criminal justice.
