A court order has halted the Biden administration’s new student loan repayment plan blocking relief for 8 million borrowers in the SAVE program.
Student Loan Repayment Freeze for 8 Million Borrowers Halted Due to Court Order
The Education Department will halt student loan payments and interest for around 8 million borrowers after a court order on Thursday blocked the Biden administration’s new repayment plan. Officials stated they would freeze loans for those in the SAVE program designed to reduce monthly payments and offer loan forgiveness for some long-term borrowers. This court decision disrupts President Joe Biden’s efforts to assist students with high loan payments with U.S. Secretary of Education Miguel Cardona criticizing the lawsuits that impede relief for many borrowers.
Federal Appeals Court Blocks Student Loan Forgiveness Program, Leaving Borrowers in Limbo
Previously, judges in Kansas and Missouri had blocked parts of the plan in June, but a federal appeals court allowed it to proceed in July. However, the 8th Circuit Court of Appeals has now fully blocked the program again creating uncertainty for borrowers. Critics, such as House Education and Workforce Committee Chair Virginia Foxx argue that the plan represents government overreach and is unfair to taxpayers. Foxx condemned the administration for pushing what she considers an illegal plan with damaging effects.
This legal battle is familiar to the Education Department, which paused payments for about 3 million borrowers in June due to another court decision. Although an appeals court later overturned that decision, the department has paused those payments again, along with others in the SAVE program. The specific timing of the new freeze is still unclear. Mike Pierce, head of the Student Borrower Protection Center said the department had limited options and that stopping payments is the only way to comply with the court order, according to the report of Politico.
READ ALSO: Boost Your Wallet: Alaska’s Permanent Fund Dividend Gets a Bigger Boost!