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2mo ago

Court Halts Biden Administration’s SAVE Plan, Threatening Student Loan Forgiveness Programs

The 8th Circuit Court of Appeals blocks multiple income-driven repayment plans, raising uncertainty for millions of borrowers and their repayment terms.

U.S. President Joe Biden delivers remarks about the student loan forgiveness program from an auditorium on the White House campus in Washington, U.S., October 17, 2022. REUTERS/Leah Millis/File Photo
A file photo shows a student debt relief activist at a rally at the U.S. Supreme Court on June 30, 2023 in Washington, D.C.
The former Biden administration's SAVE student loan plan faces further setback from the U.S. Court of Appeals.
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Overview

  • The 8th Circuit Court of Appeals issued an injunction against the SAVE plan, a key Biden administration initiative aimed at reducing student loan payments and accelerating forgiveness.
  • The court argues that Congress did not explicitly authorize widespread loan forgiveness under the Higher Education Act, calling into question the legality of several income-driven repayment (IDR) plans.
  • The ruling also extends the block to other IDR plans, including Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE), potentially increasing monthly payments for millions of borrowers.
  • If forced to switch to less generous repayment plans, borrowers could see significant financial impacts, with some facing thousands of dollars in additional repayment costs over time.
  • Congress is considering legislation to repeal current IDR plans entirely, replacing them with a new system that eliminates loan forgiveness, which advocates warn could lead to lifelong debt for many borrowers.