Courts halt parts of President Biden’s student loan repayment plan

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Two lawsuits filed by Republican-led states argue that the Biden administration overstepped its authority when it implemented the SAVE (Saving on a Valuable Education) repayment plan.

Two federal court judges in Kansas and Missouri have paused parts of a student loan repayment plan that the Biden administration launched. Two federal court judges in Kansas and Missouri have paused parts of a student loan repayment plan that the Biden administrationargue that the Biden administration overstepped its authority when it implemented the SAVE repayment plan.Two parts of the SAVE plan will be on pause until the cases are fully litigated.

Like existing income-driven repayment plans, SAVE ties monthly payments to a borrower’s income and family size. But the SAVE plan offers the most generous terms, especially for low-income borrowers.Borrowers enrolled in SAVE may also be eligible for student debt relief in a shorter amount of time than under other income-driven plans. Those who borrowed $12,000 or less will see their debt forgiven after paying for just 10 years under SAVE.

Starting in July, payments on loans borrowed for undergraduate school were set to be reduced from 10% to 5% of discretionary income for those enrolled in SAVE. And borrowers who have loans from both undergraduate and graduate school were expecting to pay a weighted average of between 5% and 10% of their income based upon the original principal balances of their loans.

 

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