8 million student-loan borrowers on Biden’s new repayment plan just got more bad news after a federal court officially blocked cheaper payments and debt cancellation – MASHAHER

ISLAM GAMAL11 August 2024Last Update :
8 million student-loan borrowers on Biden’s new repayment plan just got more bad news after a federal court officially blocked cheaper payments and debt cancellation – MASHAHER


  • The 8th Circuit officially blocked the SAVE student-loan repayment plan in its entirety.

  • It replaces its temporary stay on the plan from July, which paused cheaper payments and debt relief.

  • Enrolled borrowers will likely be in limbo for long as the legal process progresses.

The legal roller coaster for millions of student-loan borrowers continues.

On Friday, the 8th Circuit Court of Appeals placed a preliminary injunction on President Joe Biden’s SAVE income-driven repayment plan, intended to lower monthly payments and shorten the timeline for relief for the 8 million borrowers enrolled.

If this sounds familiar, that’s because it is: on July 18, the 8th Circuit placed a temporary stay on the plan in response to a lawsuit led by Missouri’s attorney general to block the plan from being implemented. This latest ruling replaces that stay, and it likely means that enrolled borrowers will be in limbo for longer as the legal process is carried out.

“Among the considerations here are that all borrowers currently impacted by our administrative stay are in administrative forbearance and thus not required to pay principal or interest on their loans, borrowers who have remained in PAYE and REPAYE plans are not impacted, and the States cannot turn back the clock on any loans that have already been forgiven,” the 8th Circuit said in its ruling.

The Education Department did not immediately respond to a request for comment from Business Insider on what this latest ruling will mean for borrowers. As a result of the legal challenges, the department has already placed all enrolled borrowers on administrative forbearance, during which the borrowers are not required to make any payments and interest will not accrue.

Additionally, while the department confirmed this forbearance period would not count toward forgiveness progress for borrowers on Public Service Loan Forgiveness or income-driven repayment, it recently released guidance on other ways borrowers could still get credit, including switching to a new repayment plan.

Legal challenges to SAVE have been ongoing for months. Earlier this year, two separate groups of GOP state attorneys general filed lawsuits to block parts of the plan, leading two federal courts to place preliminary injunctions on the cheaper payments and debt relief. The 10th Circuit later granted Biden’s request to stay one of the rulings, but the 8th Circuit ultimately halted the plan from being implemented in its entirety.

The back-and-forth has sparked confusion and stress among many borrowers who aren’t sure what their finances will look like if SAVE is blocked. One borrower on SAVE previously told BI that he’s worried he’ll have to sell his house or get a second job if he no longer has access to cheaper payments under the plan.

“Right when my wife and I felt like we were in a position to start a family and start the next chapter of our lives, it feels like the rug got pulled out from underneath us because it sure seemed like the SAVE plan was something that we could rely on,” he said.

Are you enrolled in SAVE? Share your story with this reporter at [email protected].

Read the original article on Business Insider


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