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President Joe Biden’s Saving on a Valuable Education plan was temporarily blocked by a federal appeals court on Thursday, a move that’s left millions of borrowers enrolled in SAVE unsure about what comes next.
This decision is the latest in a string of dizzying rulings on the Biden-Harris administration’s newest student debt repayment plan. In June, two federal judges filed injunctions against critical parts of the SAVE plan in response to Republican-led lawsuits filed in Kansas and Missouri. These rulings temporarily prevented the Department of Education from lowering payments for SAVE borrowers and blocked new forgiveness efforts under the income-driven repayment program.
On June 30, the 10th US Circuit Court of Appeals ruled to allow the Department of Education to proceed with lowering borrowers’ payments to 5% of their discretionary income. However, Thursday’s ruling by the 8th US Circuit Court of Appeals temporarily halted all elements of the administration’s SAVE plan that were not already blocked.
“There are now two conflicting rulings by two different circuit courts, which can be resolved only by the US Supreme Court,” said Mark Kantrowitz, financial aid expert and CNET Money Expert Review Board member. “The US Department of Education may have the option of choosing which court opinion to follow until the US Supreme Court issues a ruling.”
Payments for borrowers in the SAVE plan have been paused while the administration works to recalculate their monthly student loan payments. Following Thursday’s ruling, the Department of Education issued a statement saying borrowers enrolled in SAVE would be placed in an interest-free forbearance until further notice. This means SAVE borrowers won’t have to make monthly payments on their student loans until this matter is resolved by the courts.
For now, Kantrowitz says borrowers should be on the lookout for new guidance from the Department of Education. He also pointed out that these rulings are temporary and not final.
