Courts Halt Parts Of Biden's Student Loan Repayment Plan

Two federal judges in Kansas and Missouri have issued preliminary injunctions to halt parts of the Biden administration's student loan repayment plan.

In Kansas, Judge Michael Crabtree ruled that the Department of Education can't enact the full scope of the Saving on a Valuable Education (SAVE) program, The Hill reported.

The scheme, introduced last year, aims to lower monthly payments for borrowers and expedite debt forgiveness.

The injunctions have been issued following lawsuits filed by Republican-led states, which claimed that the administration exceeded its authority with the SAVE repayment plan.

Crabtree, an Obama appointee, said the department did not get explicit authority from Congress for a part of the program.

In Missouri, Judge John Ross, also an Obama appointee, ruled that the Department of Education cannot forgive any loans under SAVE.

The court rulings temporarily prevent the Biden administration from forgiving more federal student debt under the SAVE plan, which allows borrowers to achieve debt forgiveness after making payments for at least 10 years.

So far, it has resulted in $5.5 billion in debt cancellations for 414,000 participants.

The administration is also barred from implementing further provisions of the SAVE plan. Originally, millions of borrowers anticipated lower payments starting in July, but the future of these reductions is now uncertain.

White House Press Secretary Karine Jean-Pierre criticized the rulings and said that the administration will continue to seek relief for students and borrowers. The Department of Justice plans to defend the SAVE plan vigorously.

The Department of Education has not yet commented on the court decisions.

The SAVE plan was introduced after the Supreme Court rejected President Biden's broader student loan forgiveness proposal last summer. It is designed similarly to existing income-driven repayment plans, adjusting monthly payments based on a borrower's income and family size. However, SAVE offers more generous terms, particularly benefiting low-income borrowers.

Until now, over 8 million borrowers have enrolled in SAVE, with 4.6 million qualifying for $0 monthly payments. Under SAVE, borrowers with debts of $12,000 or less can see their loans forgiven after just 10 years of payments. For larger amounts, every additional $1,000 borrowed adds a year of required payments.

However, a key provision, which would reduce payments on undergraduate loans from 10% to 5% of discretionary income, may be delayed due to the ongoing litigation.

This provision was scheduled to start next month.

The lawsuits, filed by a coalition of Republican-led states, argue that the SAVE plan effectively converts many loans into grants without congressional approval.