'A recipe for chaos': Student debt stakeholders react to federal courts blocking Biden's SAVE plan

Original Article:

Source: Link

Summer plans may have just been dashed for federal student loan borrowers hoping to see their payments drop in July. Federal judges in Kansas and Missouri issued rulings on Monday on separate lawsuits aiming to block further implementation of President Joe Biden's Saving on a Valuable Education income-driven repayment plan. The decisions bar the Biden administration from forgiving any more debt under the program and from lowering borrowers' payments on the plan in July, as planned, until the cases are resolved. Borrowers' monthly payments are currently calculated as 10% of their discretionary income, which was scheduled to drop to 5% in July. Some borrowers have already seen their loans forgiven due to the SAVE plan. In February, the administration started clearing balances for borrowers on the SAVE plan who'd been repaying their loans for at least 10 years and started with low initial balances. Now, borrowers who otherwise would be eligible for forgiveness under this plan will wait in limbo while the district courts decide whether the Biden administration has the authority to forgive more debt. "The Department of Justice will continue to vigorously defend the SAVE Plan," Secretary of Education Miguel Cardona said in a statement. Cardona said Republican elected officials and special interest groups are trying to block the SAVE plan, "even though the Department has relied on the authority under the Higher Education Act three times over the last 30 years to implement income-driven repayment plans." For now, borrowers currently on the SAVE plan and those who apply going forward may still be able to lower their monthly payments, depending on their income, though not to the 5% of discretionary income threshold. Borrowers can continue to enroll in the SAVE plan if they haven't already, according to the Federal Student Aid website, which says it will provide more updates soon.