Student loan borrowers who were expected to get debt forgiveness or payment reductions under Biden’s new repayment plan won’t get it — yet. Here’s what you need to know.

• Two federal judges on Monday blocked parts of the SAVE income-driven student loan repayment plan.

• The rulings mean that student loan forgiveness and payment reductions set to begin in July cannot move forward.

• The Justice Department is appealing the decisions, and the courts have not yet issued a final decision.

Legal challenges to President Joe Biden’s student debt relief efforts are back — and the latest rulings are bad news for his new repayment plan.

District courts in Kansas and Missouri on Monday evening issued rulings blocking parts of the new SAVE income-driven repayment plan, first introduced last summer in an effort to offer borrowers lower payments. affordable and a shorter period for loan cancellation.

The first lawsuit was filed in March in Kansas by 11 Republican state attorneys general, and the second was filed in April in Missouri by seven Republican state attorneys general. In both cases, the plaintiffs asked the courts to block the SAVE plan and accompanying loan forgiveness, arguing that the relief is beyond the administration’s power.

Monday’s district court rulings were different, but both dealt a major blow to the SAVE plan. Kansas Judge Daniel Crabtree ruled that new SAVE provisions set to take effect July 1, such as reduced monthly payments, could not be implemented as the court case proceeded. Missouri Judge John Ross ruled that the plan’s provision to cancel student debt for borrowers with original balances of $12,000 or less and who have only been eligible for 10 years is also now blocked.

Education Secretary Miguel Cardona condemned the decisions Monday, saying in a statement that “the Department of Justice will continue to vigorously defend the SAVE plan.”

“Republican officials and special interests have been sued to prevent their own constituents from benefiting from this plan – even though the department has relied on the authority of the Higher Education Act three times over the past few years. last 30 years to implement income-driven repayment plans,” Cardona said.

“As we continue to review these decisions, the SAVE plan still means lower monthly payments for millions of borrowers – including more than 4 million borrowers who owe no payments, and protections for borrowers facing interest excessive when they make their monthly payments,” he added.

Here’s what borrowers need to know about the decisions.

First decision: no new payment reform

Student loan borrowers already enrolled in SAVE can continue to make payments calculated for them by the plan. However, new provisions set to take effect July 1 — including cutting undergraduate borrowers’ payments in half and forgiving credit for the forbearance carryover period — are on hold.

Here’s why: Crabtree of Kansas ruled, in part, in favor of the attorneys general, and he explained in his decision that the SAVE plan’s monthly payment cap and shortened payment period for forgiveness “exceed any generosity previously authorized by Congress.

However, Crabtree decided to preserve provisions of the SAVE that have already taken effect because the plaintiffs failed to adequately demonstrate how they were harmed by parts of the plan already in place. For example, the Department of Education announced plans in June 2023 to cap monthly payments and announced a shorter forgiveness deadline a month in advance, giving attorneys general time to challenge the plan sooner .

“This all begs the question of why: If these parts of the SAVE plan promised irreparable harm to plaintiffs, why didn’t they move to enjoin the SAVE plan before it took effect?” Crabtree wrote.

However, regarding the new SAVE provisions set to take effect July 1, Crabtree ruled that the plaintiffs successfully demonstrated harm because there was no delay in challenging the unimplemented provisions. implementation of the plan, and that any future repairs would be irreversible.

So, rather than rescinding or modifying any of the provisions already implemented through SAVE, Crabtree has decided to suspend any new measures that have not yet been implemented until the court make a final decision.

Second decision: no student loan forgiveness

While thousands of borrowers have already received student loan forgiveness through the SAVE provision, which cancels debt for borrowers with an initial balance of $12,000 or less, no other borrowers will be able to benefit from this relief For now.

Ross of Missouri made a different decision regarding SAVE. He initially said Missouri’s argument that the plan would harm student loan company MOHELA — based in Missouri — through lost revenue was valid, given that it was the same conclusion at which the Supreme Court achieved when it struck down Biden’s first attempt at large-scale debt relief. summer.

As for the fate of SAVE, Ross ruled that while SAVE’s already implemented provisions may remain, any future student loan forgiveness through the plan is blocked. He wrote that Congress failed to consider the magnitude of loan forgiveness under SAVE and that, therefore, the attorneys general have a “good chance” of success on the merits in their assertion. that the Secretary exceeded his authority in promulgating a loan. forgiveness provision under the SAVE program.

He also said that even without allowing student loan forgiveness, the other provisions, like reduced payments and limited interest accrual, would still provide relief to borrowers. Because the attorneys general have not adequately explained why the other provisions should be blocked, Crabtree said he would only issue a preliminary injunction on debt forgiveness.

Cardona said On Tuesday, the Justice Department will appeal the decisions.

White House Press Secretary Karine Jean-Pierre said in a statement that the Department of Education “will continue to enroll more Americans in the SAVE program and help more students and borrowers access plan benefits that remain available, including $0 payments for anyone making $16 an hour.” or less, lower monthly payments for millions more borrowers, and protection for borrowers from excessive interest if they make their monthly payments.

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