Parts of the Biden administration’s efforts to provide relief through student debt forgiveness face setbacks as federal judges halt aspects of an income-driven repayment plan set to begin next week.
The SAVE Plan, slated to implement various benefits on July 1 including halving loan payments and offering forgiveness credits for deferment and forbearance periods, has been stalled by injunctions from federal judges. These rulings challenge the Education Department’s authority and legality in enacting the full scope of the SAVE Plan.
One judge in Kansas cited a lack of congressional authority for the Education Department to execute the full SAVE Plan. In Missouri, another judge ruled that the plan unlawfully impacts state loan operators’ revenue by forgiving loans.
The injunctions do not affect the approximately 400,000 borrowers who have already benefited from over $5.5 billion in debt forgiveness under the SAVE Plan. However, they prevent the Education Department from implementing key aspects, such as reducing monthly payments and modifying repayment periods for borrowers with larger loans.
The Biden administration, expressing strong disagreement with the rulings, intends to appeal and continue defending the SAVE program. Despite these legal challenges, borrowers can still enroll in the SAVE Plan, and the administration remains committed to using all available tools to provide relief to students and borrowers.
Education Secretary Miguel Cardona emphasized that the SAVE Plan is historically the most affordable repayment option, and reiterated the administration’s commitment to supporting student borrowers despite ongoing legal obstacles.
