8 million student loan borrowers benefiting from Biden’s new repayment plan just got bad news after a federal court officially blocked cheaper payments and debt cancellation

• The 8th Circuit has formally blocked the SAVE student loan repayment plan in its entirety.

• It replaces the temporary suspension of the July plan, which suspended cheaper payments and debt relief.

• Registered borrowers will likely remain in limbo for a long time as the legal process progresses.

The legal roller coaster continues for millions of student loan borrowers.

The 8th Circuit Court of Appeals issued a preliminary injunction on Friday on President Joe Biden’s SAVE income-based repayment plan, which is intended to lower monthly payments and shorten the relief period for the 8 million borrowers enrolled.

If this sounds familiar, that’s because it is: On July 18, the 8th Circuit temporarily suspended the plan in response to a lawsuit filed by the Missouri attorney general seeking to block the plan’s implementation. This latest decision supersedes that stay, and it likely means enrolled borrowers will be in limbo for longer while the legal process plays out.

“Among the considerations here are that all borrowers currently affected by our administrative suspension are in administrative forbearance and therefore are not required to pay principal or interest on their loans, borrowers who remained in PAYE and REPAYE plans are not affected, and states cannot roll back loans that have already been forgiven,” the 8th Circuit said in its decision.

The Education Department did not immediately respond to a request for comment from Business Insider on what this latest decision will mean for borrowers. Following legal challenges, the ministry has already placed all registered borrowers under administrative suspensionduring which borrowers are not required to make payments and interest does not accrue.

Additionally, while the department confirmed that this forbearance period would not count toward debt forgiveness progression for borrowers receiving public service forgiveness or income-based repayment, it recently issued guidance on other ways borrowers could still obtain credit, including switching to a new repayment plan.

Legal challenges to SAVE have been ongoing for months. Earlier this year, two separate groups of Republican state attorneys general filed lawsuits to block parts of the plan, leading two federal courts to issue preliminary injunctions on the lower payments and debt relief. The 10th Circuit later granted Biden’s request to stay one of the decisions, but the 8th Circuit ultimately blocked the plan from being implemented in its entirety.

The back-and-forth has left many borrowers confused and stressed about what their finances will look like if the SAVE plan is frozen. One SAVE borrower previously told BI that he fears he will have to sell his home or get a second job if he no longer has access to cheaper payments under the plan.

“Just when my wife and I felt like we were able to start a family and start the next chapter of our lives, it was like the rug was pulled out from under us because it seemed like the SAVE plan was something we could count on,” he said.

Are you a SAVE subscriber? Share your story with this reporter at [email protected].

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