With courts blocking Biden's student loan plans to cancel debt, the Feds have paused payments and interest. pic.twitter.com/vp4TDT8qyf
— Wall Street Silver (@WallStreetSilv) July 2, 2024
In response to court rulings blocking key elements of the federal government’s new student loan repayment program, the Biden administration will be giving about 3 million borrowers a reprieve from their monthly payments
The 3 million borrowers eligible for the pause are enrolled in the income-driven repayment program dubbed SAVE and have a monthly payment that is more than zero, according to the U.S. Department of Education. About 4.5 million SAVE enrollees who qualify for zero-dollar payments because of low incomes will not be included in the pause.
The payment pause is similar to the COVID-19 student loan relief that lasted for 3 1/2 years, from March 2020 through September 2023, during which borrowers didn’t have to pay monthly bills and interest didn’t accrue.
Borrowers who are eligible for the new pause will be informed directly in the coming days, a spokesperson for the Education Department told The Epoch Times.
The announcement was made days after a federal judge in Kansas, siding with attorneys general of three Republican-led states, blocked the implementation of the final segment of the SAVE plan but declined to unwind the portions of it that are already in place.
The blocked segment is a calculation formula update scheduled to take effect on July 1. It would have allowed borrowers with undergraduate loans to have their monthly payments capped at 5 percent of their discretionary income, down from the current 10 percent limit.
Borrowers with undergraduate and graduate school loans would also have seen a reduction in repayments, with the amount depending on the proportion of their graduate and undergraduate loan debt.
A separate ruling by a federal court in Missouri put SAVE’s debt discharge provisions on hold while litigation challenging the program moves forward. The SAVE plan offered debt cancellations for those who originally took out $12,000 or less in loans and have made at least 10 years of monthly payments.