President Joe Biden’s Saving on a Valuable Education (SAVE) plan faced a setback when a federal appeals court temporarily blocked it on Thursday. This has left millions of borrowers who are part of the SAVE program uncertain about their future repayment obligations.
This latest decision adds to a series of judicial challenges to the Biden-Harris administration’s student debt repayment initiatives. In June, federal judges issued injunctions against key components of the SAVE plan following lawsuits led by Republicans in Kansas and Missouri.
These injunctions temporarily halted the Department of Education’s efforts to reduce payments for SAVE borrowers and to implement new debt forgiveness measures under the income-driven repayment program.
Court Blocks Biden’s Student Loan Plan, Leaving Borrowers Uncertain
On June 30, the 10th US Circuit Court of Appeals allowed the Department of Education to proceed with reducing borrowers’ payments to 5% of their discretionary income. However, the 8th US Circuit Court of Appeals’ ruling on Thursday has now paused all aspects of the SAVE plan that were not already stopped.
Mark Kantrowitz, a financial aid expert, noted the conflicting decisions between the two circuit courts, which he believes will ultimately need to be resolved by the US Supreme Court. He mentioned that the Department of Education might choose which court ruling to follow until a definitive Supreme Court decision is made.
In response to the recent ruling, the Department of Education announced that payments for borrowers in the SAVE plan would be paused, placing them in an interest-free forbearance. This means that borrowers will not have to make monthly payments until the legal issues are settled. Meanwhile, Kantrowitz advises borrowers to stay updated with new guidance from the Department of Education, emphasizing that these court rulings are temporary.
