Parts of the Student Debt Forgiveness Plan Have Been Halted: What You Need to Know

(NEXSTAR) – In yet another blow to the Biden administration’s attempts to provide student debt relief to Americans, two federal judges have suspended parts of an income-based repayment plan that takes effect next week.

Various related benefits the SAVE Plan were defined for take effect on Monday, July 1st. This included cutting payments on some loans in half and giving borrowers credit for forgiveness for certain periods of deferment and forbearance. Many SAVE Plan borrowers were also scheduled to skip a payment in July thanks to a “brief processing forbearance.”

Two injunctions handed down by federal judges on Monday appear to be putting those plans in jeopardy.

Here’s what we know.

What are the injunctions?

In a ruling, a Kansas judge ruled that the Department of Education cannot approve the full scope of the SAVE Plan because it did not receive authority from Congress to do so, The Hill previously reported.

In the other, a Missouri judge ruled that the department cannot forgive any loans under the SAVE Plan because it illegally deprives state loan operators of revenue.

These orders, each handed down by a judge appointed by former President Barack Obama, result from two lawsuits in which the plaintiff states sought to invalidate the entire SAVE program.

What impact will the injunctions have on SAVE borrowers?

The determinations do not affect the approximately 400,000 borrowers who have already seen more than $5.5 billion in debt forgiveness under the plan.

Other SAVE Plan borrowers may not be so lucky. The assistance they already receive through the program is not affected, while other benefits appear to be.

As part of the Kansas decision, the Department of Education will not be able to implement parts of the SAVE program intended to help students who had larger loans and could have their monthly payments reduced and their required repayment period reduced from 25 years to 20 years. The Missouri judge’s order says the Department of Education cannot forgive loan balances going forward, but can still reduce monthly payments.

For now, the Biden administration cannot forgive more debt for SAVE Plan borrowers and cannot cut payments to borrowers as planned in July. It is also unclear whether the “brief processing grace” many borrowers were told they would be placed on in July will still happen.

What’s next for the SAVE program?

The orders are preliminary, meaning the injunctions imposed by the judges would remain in effect while the separate cases are heard. However, to issue a temporary order, each judge had to conclude that the states would likely prevail at trial.

This also means it is too early to say what long-term impact the injunctions will have on the SAVE Plan.

The White House said it strongly disagrees with the justices’ decisions and will continue to defend the program and use all available tools to provide relief to students and borrowers.

In a statement, White House Press Secretary Karine Jean-Pierre said the Biden administration “will never stop fighting for students and borrowers – no matter how many obstacles Republican elected officials and special interests throw in our path.” On Tuesday, she said the Department of Justice will appeal both decisions.

The Department of Education’s federal student aid office grades who is “evaluating decisions”. Authorities also explain that these injunctions do not prohibit borrowers from enrolling in the SAVE Plan.

“The Biden-Harris Administration’s SAVE Plan is the most affordable reimbursement plan in history,” Education Secretary Miguel Cardona said in a statement. declaration Tuesday. “But Republican elected officials and special interests sued to prevent their own constituents from benefiting from this plan – even though the Department has relied on authority under the Higher Education Act three times in the past 30 years to implement income-based reimbursement. . plans.”

More than 8 million borrowers have enrolled in the SAVE Plan since its launch last summer.

The Associated Press contributed to this report.

This story originally appeared on thehill.com read the full story