Student loan repayments suspended for 3M borrowers after SAVE plan blocked

• The Department of Education places 3 million student loan borrowers into administrative forbearance.
• This is the result of recent court decisions that blocked key elements of the SAVE plan, including debt relief and bill reductions.
• The department will also remove online applications for income-based repayment plans to prevent inaccurate information.

After federal courts blocked key elements of President Joe Biden’s new repayment plan, the Education Department announced additional measures to help borrowers during this time.

On Monday, two separate rulings by federal judges in Kansas and Missouri issued preliminary injunctions on key provisions of the SAVE income-based repayment plan. These include blocking a shorter deadline for student loan forgiveness and new provisions set to take effect July 1, including lower monthly payments for undergraduate borrowers.

The Justice Department has appealed both decisions, and while the courts have yet to make a final decision on the fate of the SAVE plan, aid is temporarily blocked. A Department of Education spokesperson told Business Insider that as a result of these decisions, the department will place approximately 3 million borrowers with payment amounts greater than $0 on administrative deferment, during which they will not owe any payment and interest will not accrue.

Additionally, the department is removing all online applications for income-driven repayment plans and loan consolidations to ensure borrowers do not receive inaccurate information during this time. These changes are expected to take approximately four to six weeks, and borrowers can continue to submit paper applications for income-driven repayment or SAVE programs, which servicers will continue to process.

“President Biden, Vice President Harris, and Secretary Cardona remain committed to fixing a broken student loan system and making college more affordable for more Americans,” a department spokesperson said in a statement. “They will not stop vigorously defending the SAVE plan, the most affordable repayment plan in history, and will continue to fight for this long-overdue relief no matter how many times Republican elected officials and their allies try to stop them.”

The Ministry will communicate these changes directly to affected borrowers in the coming days.

The lawsuits in question were filed earlier this year by a group of Republican state attorneys general who argued that the tax break provided by the SAVE plan constituted an abuse of Biden’s authority and harmed state tax revenues. their states.

Both judges ruled that elements of the SAVE plan that have already taken effect can remain in place, but that any future relief — such as continued batches of borrowers eligible for loan forgiveness — cannot be implemented as the legal process moves forward.

Following these rulings, some Democratic advocates and lawmakers have called on the Department of Education to place affected borrowers on forbearance or implement another form of relief, given the confusion that could result from these injunctions.

“This damning and damaging lawsuit will only further plunge struggling borrowers into chaos, deny them the student debt cancellation they demand and deserve, and prevent them from buying homes, growing their families, and so much more,” Rep. Ayanna Pressley said in a statement Tuesday.
“The Biden administration must continue to take immediate action to ensure borrowers receive the student debt forgiveness they were promised. »