WASHINGTON (AP) — A federal appeals court has blocked implementation of the Biden administration’s student debt relief plan that would have reduced monthly payments for millions of borrowers.
In a ruling Thursday, the 8th Circuit Court of Appeals granted a request for an administrative stay filed by a group of Republican-led states seeking to invalidate the government’s entire student loan forgiveness program. The court’s order prohibits the government from implementing the parts of the SAVE plan that have not already been blocked by lower court rulings.
The ruling came on the same day that the Biden administration announced another round of student loan forgiveness, this time totaling $1.2 billion for about 35,000 borrowers eligible for the Public Service Loan Forgiveness program.
The PSLF program, which provides relief to teachers, nurses, firefighters and other public servants who make 120 qualifying monthly payments, was originally passed in 2007. But for years, borrowers faced strict rules and servicer errors that prevented them from getting their debt forgiven. The Biden administration adjusted some of the program’s rules and retroactively gave many borrowers credits for their required payments.
Borrowers participating in the SAVE plan that was the subject of Thursday’s decision will be placed in an interest-free payment deferral while the case works its way through the legal system, Education Secretary Miguel Cardona said Thursday.
“Today’s 8th Circuit ruling blocking President Biden’s SAVE plan could have devastating consequences for millions of students suffering from unaffordable monthly payments if it remains in effect,” Cardona said in a statement. “It is shameful that politically motivated lawsuits from Republican elected officials are once again standing in the way of lower payments for millions of borrowers.”
Two separate lawsuits challenging Biden’s SAVE plan have been working their way through the courts. In June, federal judges in Kansas and Missouri issued separate rulings blocking much of the administration’s plan to create a faster path to loan repayment and reduce monthly income-based repayment from 10% to 5% of a borrower’s disposable income. Those orders did not affect debt that had already been forgiven.
The 10th Circuit Court of Appeals issued a ruling allowing the department to continue with the reduced monthly payments. The 8th Circuit Court’s decision Thursday blocks all aspects of the SAVE plan.
The Education Department said it was reviewing the ruling. “Our administration will continue to vigorously defend the SAVE plan – it has helped over 8 million borrowers get lower monthly payments, including 4.5 million borrowers who had to make a zero-dollar payment each month,” the administration said. “And we will not stop fighting efforts by Republican officials to raise the cost of student loan payments for millions of their own constituents.”
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