Biden’s SAVE Student Loan Plan Partially Blocked: Key Details
TL/DR –
Two US courts issued temporary injunctions against the Biden administration’s Saving on a Valuable Education (SAVE) student loan repayment plan, which has over 8 million enrollees. The courts in Kansas and Missouri partially ruled in favor of legal challenges brought by Republican-led states, which argued that the plan exceeded the Biden administration’s authority and could cause financial harm due to lost revenue from quicker loan forgiveness. The Department of Education stated that borrowers can still enroll in the plan, but it is uncertain what will happen to future efforts for loan forgiveness.
Temporary Injunctions against Biden’s Student Loan Repayment Plan
Temporary injunctions were issued against the Biden administration’s SAVE student loan repayment plan by two courts on Monday. These decisions are expected to introduce uncertainties and challenges for millions of student loan borrowers.
Launched a year ago, the SAVE (Saving on a Valuable Education) plan aimed to address issues with the Department of Education’s previous income-driven repayment plans. Now, it has over 8 million enrollees. Despite its popularity, several Republican-led states challenged the plan, arguing it exceeded the Biden administration’s authority and could cause financial harm due to lost revenue from the shorter loan forgiveness period. Courts in Kansas and Missouri partially agreed, halting some aspects of the plan.
What this means for borrowers
Persis Yu, deputy executive director and managing counsel of the Student Borrower Protection Center, advised borrowers to “hang tight” amidst the chaos and uncertainty surrounding the SAVE plan’s future. Here’s what you need to know about the SAVE plan’s status following this week’s legal setback.
Court Decisions
In Kansas, an injunction was placed on the next phase of the SAVE plan by U.S. District Judge Daniel D. Crabtree. In Missouri, U.S. District Judge John A. Ross blocked additional loan forgiveness under SAVE.
Enrollment in SAVE after the ruling
According to the Department of Education, borrowers can still enroll in the SAVE plan despite the rulings. More information will be provided to borrowers soon, the Department stated on its website.
Impact on forgiven student debt
Yu of the Student Borrower Protection Center believes those who have received cancellation should be able to keep it. However, the chaos and uncertainty surrounding the rulings could impact future borrowers.
Future of Student Loan Repayments
Under the SAVE plan, lower student loan repayments promised from July 1 now appear to be halted due to the Kansas ruling.
Future of Student Loan Forgiveness
The Missouri judge’s injunction applies to SAVE’s loan forgiveness provisions. How this impacts future efforts to forgive student loans depends on the litigation progress.
Responses from the Biden Administration and Republican states
The Biden administration plans to appeal the decisions and continue to defend the SAVE plan. Republican officials, however, have hailed the legal decisions as victories.
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