(NEXSTAR) – In another blow to the Biden administration’s efforts to provide Americans with student loan debt relief, two federal judges have halted parts of an income-based repayment plan that was set to take effect next week.
Various benefits associated with the SAVE plan were set to be effective on Monday, July 1. This included halving payments on some loans and granting borrowers certain periods of deferment and forbearance. Many borrowers in the SAVE plan should also skip a payment in July thanks to a “short processing deferral”.
Two interim injunctions The rulings issued by federal judges on Monday appear to put those plans in jeopardy.
Here’s what we know:
What are the interim injunctions?
In a ruling, a judge in Kansas found that the Department of Education could not fully implement the SAVE plan because it had not received authorization from Congress to do so. The Hill previously reported.
In another case, a Missouri judge ruled that the department could not forgive loans under the SAVE plan because doing so would illegally deprive government lenders of revenue.
The orders, each issued by a judge appointed by former President Barack Obama, follow two lawsuits in which the plaintiff states seek to invalidate the entire SAVE program.
What impact do the injunctions have on borrowers in the SAVE program?
The decisions will not affect the approximately 400,000 borrowers who have already had more than $5.5 billion in debt forgiven under the plan.
Other borrowers in the SAVE plan may not be so lucky. The assistance they already receive through the program will remain unaffected, while other benefits appear to be affected.
Under the Kansas ruling, the Education Department cannot implement parts of the SAVE program, which is designed to facilitate students with larger loans by reducing their monthly payments and shortening the required payment period from 25 to 20 years. According to the Missouri judge’s order, the Education Department cannot forgive loan balances going forward, but can still reduce monthly payments.
Currently, the Biden administration cannot forgive any more debt to borrowers under the SAVE plan, and Payments for borrowers cannot be reduced as planned in JulyIt is currently unclear whether the “Short grace period” many borrowers were told that they would be There will still be one for July.
What’s next for the SAVE program?
The orders are provisional, meaning the injunctions issued by the judges remain in effect while each lawsuit is heard. However, to issue a preliminary injunction, each judge had to conclude that the states were likely to prevail in a trial.
This also means that it is too early to say what longer-term impact the injunctions will have on the SAVE plan.
The White House said it strongly disagrees with the judges’ decision, will continue to defend the program, and will operate every available tool to provide relief to students and borrowers.
In a statement, White House press secretary Karine Jean-Pierre said the Biden administration will “never stop fighting for students and borrowers – no matter how many obstacles Republican officials and special interests put in our way.” On Tuesday she said The Justice Department will appeal both decisions.
The Federal Student Aid Office of the Department of Education Remarks that these are “the assessment of the judgments.” Officials also explain that these orders do not prevent borrowers from enrolling in the SAVE plan.
“The Biden-Harris administration’s SAVE plan is the most affordable repayment plan in history,” Education Secretary Miguel Cardona said in a opinion Tuesday. “But Republican officials and interest groups filed suit to prevent their own constituents from benefiting from the plan – even though the department has invoked the authority of the Higher Education Act three times in the past 30 years to implement income-based repayment plans.”
Since its launch last summer, more than 8 million borrowers have enrolled in the SAVE plan.
The Associated Press contributed to this report.
