Judges block key parts of Biden’s student loan forgiveness and repayment plan, risking relief for millions

Judges block key parts of Biden’s student loan forgiveness and repayment plan, risking relief for millions

The implementation of President Joe Biden’s new student loan repayment plan, known as Saving on a Valuable Education (SAVE), has been temporarily suspended by federal judges in Kansas and Missouri. These rulings have put debt relief for millions of Americans at risk.

The injunctions prevent the U.S. Department of Education from issuing significant provisions of the SAVE plan. As a result, the Biden administration is currently unable to forgive additional debt under the new income-based repayment plan or reduce borrowers’ payments as planned in July.

Since its launch in August, more than 8 million borrowers have enrolled in the SAVE plan. They were days away from experiencing a substantial decrease in their monthly bills.

Higher education expert Mark Kantrowitz expressed disappointment on behalf of the applicants, saying they would be disappointed that financial aid was withdrawn at the last minute.

The preliminary injunctions stem from lawsuits filed earlier this year by Republican-led states seeking to overturn the Biden administration’s creation of what it said was the most affordable student loan repayment plan in U.S. history. Under the plan, many borrowers would have to pay just 5% of their discretionary income toward their debt each month, and those earning $32,800 or less would have a $0 monthly payment.

The states argued that the Biden administration was exceeding its authority and trying to find a roundabout way to forgive student debt after its broader plan was blocked by the Supreme Court last year.

U.S. Education Secretary Miguel Cardona vowed to continue fighting for the aid, noting that Republican elected officials and special interests have sued to block their constituents from benefiting from the plan. He mentioned that the Department of Education has relied on its authority under the Higher Education Act several times over the past three decades to implement income-based repayment plans.

It is important to note that these rulings have no impact on the Biden administration’s second attempt to broadly forgive student loans, which is still underway. The previous relief package was found unconstitutional by the Supreme Court, prompting an attempted renewal.