By Alon Bidden
Published on:
On Thursday, the 8th Circuit Court of Appeals blocked the SAVE student-loan repayment plan in full, leaving millions of borrowers uncertain about their financial obligations. This ruling halts key provisions of the plan, such as lower monthly payments and a shorter timeline to debt cancellation.
As a result, 8 million student-loan borrowers on the SAVE plan will not have to make payments while the legal process continues.
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The blocking of the SAVE plan is the latest development in a series of legal battles. Earlier this year, two groups of GOP state attorneys general filed lawsuits to block the plan. In late June, federal courts blocked parts of the plan, only for the 10th Circuit to allow some provisions to move forward shortly thereafter. However, the 8th Circuit’s recent ruling has halted the plan entirely once again, causing widespread confusion among borrowers.
In response to the ruling, Education Secretary Miguel Cardona announced that all borrowers enrolled in the SAVE plan would benefit from an interest-free forbearance. This means that:
The Department of Education has committed to keeping borrowers informed with regular updates as the situation develops.
The Education Department had instructed loan servicers to process reduced payments under the SAVE plan. However, if the court issues a final ruling preventing the implementation of the plan, the department will need to recalculate borrowers’ payments. This could lead to financial strain for many borrowers who will have to adjust their budgets accordingly.
The ruling has sparked varied reactions across the political spectrum. Republican lawmakers have largely praised the decision, viewing it as a check on what they see as executive overreach. Sen.
Bill Cassidy, the leading Republican on the Senate education committee, called the ruling “another rebuke to President Biden’s illegal student loan schemes.”
Conversely, the Biden administration has criticized the ruling, arguing that it unfairly targets millions of borrowers struggling with unaffordable payments. Education Secretary Cardona emphasized the administration’s commitment to providing relief for borrowers and condemned the politically motivated lawsuits blocking the SAVE plan.
Despite the setback, the Biden administration remains committed to student loan relief. In addition to defending the SAVE plan, the Education Department is expected to finalize a broader student-loan forgiveness initiative in October, which could benefit over 30 million borrowers.
This initiative aims to provide substantial relief and support to those burdened by student loan debt.
As the legal battles continue, it’s crucial for borrowers to stay informed and be prepared for potential changes to their repayment plans.
The Education Department will continue to provide updates and support to ensure that borrowers are well-informed and can navigate these uncertain times.
The 8th Circuit Court of Appeals blocked the plan due to legal challenges from GOP state attorneys general.
No, borrowers on the SAVE plan will not need to make payments during the interest-free forbearance.
No, the forbearance period does not count towards Public Service Loan Forgiveness or income-driven repayment plans.
Borrowers should stay updated on communications from the Education Department and loan servicers.
The Biden administration is finalizing a broader student-loan forgiveness initiative expected to benefit over 30 million borrowers.
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