Handing the Biden administration an unexpected win amidst a legal back-and-forth, a court over the weekend agreed to let the Education Department continue implementing the final phases of a student loan repayment plan that will lower people’s monthly bills.
This comes after the department had already begun the process to put 3 million borrowers into a payment pause, a move officials said was necessary to comply with the court’s initial ruling last week to halt the payment cuts. But because of the latest ruling, borrowers enrolled in the SAVE Plan will now go forward with payments at their new rates beginning in July and August, officials said.
The SAVE Plan, dubbed the most affordable plan for borrowers and President Joe Biden’s hallmark surviving student debt reform effort, is the target of two Republican-led lawsuits that argue the Biden administration has gone beyond its authority in aspects of the plan. Courts in Kansas and Missouri ruled in the GOP states’ favor last week, deciding the Biden administration could not go forward with further implementation of the SAVE Plan, an income-driven repayment plan that was rolled out last August and used by 8 million people.
In particular, the rulings halted the Department of Education from cutting borrowers’ payments beginning July 1, when they were set to decrease from 10% of a borrower’s discretionary income down to 5% for those with undergraduate loans, and from canceling any more loans for people who’d taken out small initial loan balances but had been paying them down for over a decade. So far, 414,000 people have qualified for the debt relief.
After the Department of Justice filed an emergency motion on Friday, the U.S. Court of Appeals for the 10th Circuit reversed the lower court’s ruling, allowing the Biden administration to proceed with the payment cut. Debt relief remains on pause.
“Yesterday, the U.S. Court of Appeals for the Tenth Circuit sided with student loan borrowers across the country who stand to benefit from the SAVE Plan – the most affordable repayment plan in history,” Education Department Secretary Miguel Cardona said in a statement on Monday.
