Federal judges in Kansas and Missouri blocked portions of President Joe Biden’s student loan repayment plan, siding with Republican attorneys general. As a result, the Department of Education said that it would stop making monthly payments on student loans and would stop collecting interest from three million borrowers.
The Savings on a Valuable Education Plan, or SAVE for short, sets monthly payments for borrowers depending on family size and income. 4.5 million of the more than 8 million participants in the plan are eligible for $0 monthly payments due to their modest incomes.
The Department of Education planned to impose payment reductions on July 1st, which would result in many debtors having their payments halved. Daniel D. Crabtree, a Kansas District Judge, stopped that measure.
In a statement, he added, “As the court rightly recognized, whether to cancel billions of dollars of student debt is a major question that only Congress can answer.” “Students from New York with degrees in gender studies shouldn’t have to repay the student loans of blue-collar Kansas laborers who never attended college.”
Meanwhile, U.S. District Judge John A. Ross of Missouri stopped the SAVE plan from forgiving more student loans. Rather than following the standard 20–25-year schedule, some borrowers have had their obligations erased after just 10 years.
A Department of Education spokeswoman, meanwhile, told Politico that the agency will not back down from its pledge “to fight for this long-overdue relief” for borrowers.
What legal authority gives the Biden administration the ability to defer student loan payments is unclear.
In order to comply with the court orders, the Education Department removed the SAVE program application from its website and is currently updating it. In the interim, borrowers who would still prefer to participate in the plan can do so by submitting a paper application. Borrowers will stop making monthly payments and accruing interest once enrolled.
The executive director of the nonprofit advocacy organization Student Debt Crisis Center, Natalia Abrams, told the Washington Post, “We are thrilled to see the Department of Education take rapid and decisive action.” “We are calling for a widespread payment hold on all federal student loans due to the Save plan’s unclear language, ambiguous implications, and legal uncertainty.”
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