The Department of Education will suspend student loan and interest payments for about 8 million borrowers after a court order Thursday blocked the Biden administration’s latest repayment program.
Agency officials said they would freeze loans for borrowers enrolled in the program, known as SAVE, until funds run out. through the courts. The plan reduces monthly payments for nearly all enrollees and offers loan forgiveness for some longtime borrowers. The order further ousts the president Joe Bidenthe promise to combat high loan payments for debt-burdened students.
“It is shameful that politically motivated lawsuits by Republican elected officials are once again preventing lower payments for millions of borrowers,” U.S. Education Secretary Miguel Cardona said in a statement. He warned that the order would have “devastating consequences for millions of student loan borrowers, crushed by unaffordable monthly payments, if it remains in effect.”
Federal district judges in Kansas and Missouri main provisions blocked of the plan in June. But a federal appeals court halted that ruling in July and allowed the Biden administration to move forward with its lower monthly payments. Thursday’s unsigned orderof the 8th Circuit Court of Appeals, completely blocks the program for an unclear period of time.
Critics argue that the plan represents government overreach and unfairly burdens taxpayers.
“The chaos and destruction this administration is inflicting on the nation’s student loan system is unprecedented,” said the chairman of the House Education and Workforce Committee. Virginia Foxx (RN.C.) said. “Is it arrogance, ignorance or indifference that encourages the Biden administration to advance an illegal agenda that has dangerous repercussions?”
This is not the first time the Department of Education has frozen payments because of lawsuits. Authorities took a break 3 million borrower payments in June, after a federal judge in Kansas blocked the government from reducing them, a part of the plan that would take effect in July. An appeals court later reversed the decision. But the department again suspended payments for those borrowers, along with others in the program. Authorities have not yet said when the freeze will take effect.
Mike Pierce, executive director and co-founder of the Student Borrower Protection Center, said the department had few other options. “It’s the only way to be sure you’re not violating this court order,” he said.
