In a recent development, two federal court judges from Kansas and Missouri have halted portions of a student loan repayment plan initiated by the Biden administration last year. The plan, known as the SAVE (Saving on a Valuable Education) repayment plan, aims to lower borrowers’ monthly payments and expedite debt forgiveness.
These legal actions stem from lawsuits filed by Republican-led states challenging the Biden administration’s authority in implementing the SAVE plan. Both judges issued partial preliminary injunctions on Monday, pausing two key components of the plan until the cases are fully litigated.
Under the SAVE plan, borrowers become eligible for debt forgiveness after making at least 10 years of payments. To date, $5.5 billion has been forgiven for 414,000 individuals enrolled in the program. However, with the recent court rulings, the Biden administration is prohibited from canceling additional federal student debt for borrowers in the SAVE plan and implementing further provisions of the plan.
Despite these setbacks, White House press secretary Karine Jean-Pierre emphasized the administration’s commitment to providing relief to students and borrowers. The Department of Justice plans to appeal both court decisions. Meanwhile, Education Secretary Miguel Cardona highlighted the benefits of the SAVE plan, such as lower monthly payments and protections against accruing interest.
The SAVE plan was introduced following the Supreme Court’s rejection of President Biden’s original student loan forgiveness program last year. With more than 8 million borrowers enrolled in SAVE, the plan offers generous terms, particularly for low-income individuals. Borrowers with loans of $12,000 or less can have their debt forgiven after 10 years of payments, while those with higher loan amounts may receive forgiveness after making additional payments.
The litigation surrounding the SAVE plan has raised concerns about its cost, with estimates ranging from $138 billion to $475 billion over 10 years. Despite the uncertainties resulting from the court rulings, borrowers currently enrolled in the SAVE plan can continue making payments as usual.
As the legal battle continues, the fate of the SAVE plan’s future provisions remains uncertain. The pause on certain aspects of the plan, including reduced payments for undergraduate loans, may impact millions of borrowers awaiting relief. Stay tuned for further updates on this evolving story.
