- Two federal judges have blocked significant parts of President Joe Biden’s new student loan repayment plan.
- The preliminary injunctions stop the U.S. Department of Education from implementing provisions of The Saving on a Valuable Education, or SAVE, plan, including the lower payments set to begin in July.
- The Biden administration also won’t be able to forgive any more debt under the plan until the cases are decided.
Two federal judges in Kansas and Missouri have temporarily halted significant parts of President Joe Biden’s new student loan repayment plan, putting debt relief for millions of Americans in jeopardy.
The Monday evening rulings stop the U.S. Department of Education from implementing major provisions of the Saving on a Valuable Education, or SAVE, plan. Until the cases are decided, the Biden administration is prevented from forgiving any more debt under the new income-driven repayment plan and from further reducing borrowers’ payments in July, as it planned to.
More than 8 million borrowers have enrolled in the SAVE plan since it launched in August. Those enrolled were less than a week away from seeing their monthly bills drop by a half or more.
“Borrowers will be disappointed [and] angry that financial relief was yanked away from them at the last minute,” said higher education expert Mark Kantrowitz.
More from Personal Finance:
These are the least difficult areas in U.S. to buy a home
How TikTok’s viral ‘no-spend month’ could come back to bite you
IRS will deny billions in ‘improper’ pandemic-era small business claims
The preliminary injunctions are a result of lawsuits filed earlier this year by Republican-led states, which hoped to upend the Biden administration’s creation of what it called the most affordable student loan repayment plan in history. Under the plan, many borrowers pay just 5% of their discretionary income toward their debt each month, and anyone making $32,800 or less has a $0 monthly payment.
The states argued that the Biden administration was overstepping its authority and trying to find a roundabout way to forgive student debt after the Supreme Court blocked its sweeping plan last year.
U.S. Secretary of Education Miguel Cardona vowed to fight for the relief.
“Republican elected officials and special interests sued to block their own constituents from being able to benefit from this plan — even though the Department has relied on the authority under the Higher Education Act three times over the last 30 years to implement income-driven repayment plans,” Cardona said in a statement Monday.
“The Department of Justice will continue to vigorously defend the SAVE Plan,” he added.
These rulings do not impact the Biden administration’s second attempt to deliver broad student loan forgiveness, after its first aid package was ruled unconstitutional by the Supreme Court. That do-over effort is still ongoing.
This is breaking news. Please check back for updates.
