Student loan borrowers on SAVE get court victory; Cheaper bills can begin

Student loan borrowers on SAVE get court victory; Cheaper bills can begin

President Joe Biden.
Irfan Khan/Los Angeles Times via Getty Images

  • Two federal judges blocked cheaper monthly payments and student loan forgiveness through the SAVE plan.
  • The 10th Circuit granted Biden’s request to stay one of the rulings so that new provisions, such as lower-level bills, can be implemented.
  • It is still unclear what this decision will mean for borrowers in the future.

The legal rollercoaster ride for millions of students with student debt over President Joe Biden’s new repayment plan continues.

A court ruled that borrowers on the SAVE income-driven repayment plan can provisionally get the new benefits set to take effect in July, such as lower payments, after a legal challenge blocked its implementation. However, student loan forgiveness through the plan is still blocked.

On June 30, Biden’s Department of Education filed a request to stay a Kansas state court’s recent decision to block key parts of the SAVE income-driven repayment plan, such as lower monthly payments for students, that was set to take effect in July.

It is the result of two separate lawsuits filed by GOP attorneys general to block parts of SAVE. Along with the Kansas court ruling, a Missouri judge ruled that the forgiveness promised by the plan is also blocked as the legal process moves forward.

The 10th Circuit Court of Appeals granted the Department of Education’s request on the same day it was filed, ruling that Kansas’ preliminary injunction on the SAVE plan is stayed pending the appeal. The Department of Education did not immediately respond to a request for comment from Business Insider about the stay.

That means the Department of Education can continue working on implementing the new SAVE provisions, which take effect in July, for the time being. But it’s unclear exactly what that will look like for borrowers — the Department last week suspended payments for 3 million of them in light of the rulings, and it has not yet commented on how the 10th Circuit’s decision will affect borrowers going forward.

While the forbearance is a win for the Biden administration, it will likely cause more confusion for borrowers on SAVE who are struggling to understand what these legal challenges mean. In addition to placing affected borrowers on administrative forbearance, the department has also removed online applications for income-driven repayment plans to prevent misinformation as these legal challenges progress.

For now, borrowers continue to await further guidance from the Ministry of Education. Some attorneys and Democratic lawmakers have previously criticized the lawsuits for the confusion and financial burden they have created for borrowers — Persis Yu, executive director of the advocacy group Student Borrower Protection Center, previously said in a statement that the lawsuits “destroy financial security in endanger”. of millions and throw the student loan system into unsustainable chaos.”

Despite the Kansas court’s stay of the ruling, the Missouri court ruled that the SAVE plan provision to forgive student debt for borrowers with an original balance of $12,000 or less after making payments for at least 10 years remains blocked.

The Department of Justice will also appeal this decision, with a Department of Education spokesperson recently saying that the government “will not stop vigorously defending the SAVE plan, the most affordable repayment plan in history, and will keep fighting for this long term. overdue aid, no matter how many times Republican elected officials and their allies try to stop them.”