Overview

• The Supreme Court lifted an injunction in a 6–3 decision, allowing the Education Department to proceed with March’s layoffs of roughly 1,400 staffers and transfer key loan programs to other agencies.
• The Department of Education has declared the Biden-era SAVE plan illegal and will resume interest accrual and monthly payments for 8 million borrowers on August 1.
• Congress’s Big Beautiful Bill Act removes unemployment and economic hardship deferments for new federal loans after July 2027 and streamlines six repayment plans into two by summer 2026.
• Staff reductions have worsened a backlog of over 1.5 million pending income-driven repayment applications, threatening further delays and borrower confusion.
• With more than 40 million Americans owing $1.74 trillion in student debt, experts warn that cuts without a clear transition plan could create operational chaos and degrade service.