On Wednesday, the Supreme Court said it would not lift a freeze on key provisions of President Joe Biden’s income-based repayment plan, known as SAVE, which would provide 8 million enrolled borrowers with lower payments and a shorter period of debt forgiveness.
The Supreme Court said in a one-page ruling that it would not overturn an 8th Circuit Court of Appeals ruling that had blocked the plan entirely pending a final court decision on July 18 in response to a lawsuit filed by Missouri’s attorney general. The 8th Circuit Court of Appeals had formally issued a preliminary injunction against the plan in early August.
The Department of Education did not immediately respond to Business Insider’s request for comment on the impact of the ruling.
However, Attorney General Elizabeth Prelogar wrote in a response to the Supreme Court that blocking the SAVE plan could come at a significant cost to borrowers. The Education Department would be forced to recalculate the payments of millions of borrowers, which would require a forbearance period during which no interest would accrue. Borrowers would make no progress toward debt relief through Public Service Loan Forgiveness or income-driven repayment plans.
The Department of Education has already imposed a forbearance on SAVE borrowers following the 8th Circuit Court’s decision, but at the time it was unclear how long the forbearance would last. The back-and-forth court decisions have caused confusion for many borrowers struggling to plan for their future.
“I have to completely re-balance my budget,” Alan Pedrick, a 41-year-old SAVE borrower, told BI. “And this is probably the most difficult time of my life financially. The cost of housing, cars, gas and food has skyrocketed, and now they want to force us to pay it all back. It’s really quite depressing.”
