Supreme Court Blocks Key Part of Biden’s Student Loan Forgiveness Plan; Here’s What Remains
President Biden’s ambitious student loan forgiveness plan faces a significant setback after the Supreme Court declined to lift an injunction on a critical component known as the SAVE plan.
The SAVE plan, which allowed borrowers to make payments based on income and family size with potential for full debt cancellation, has been a central feature of Biden’s strategy to alleviate student loan burdens. However, its future remains uncertain as the Court’s decision leaves millions of borrowers in limbo.
The Supreme Court’s refusal to allow SAVE to move forward follows a legal challenge brought by Republican-led states. As a result, the program, which was designed to provide targeted relief to federal loan holders, has been paused since July. This has prevented further debt cancellations and left many borrowers without the financial reprieve they were counting on.
Despite this, other aspects of Biden’s loan forgiveness efforts continue. To date, his administration has canceled approximately $167 billion in student loans for around 4.75 million borrowers. However, the current situation means that those relying on SAVE may face the return of higher monthly payments under alternative repayment plans if the legal challenges prevail.
Here’s what borrowers need to know:
Eligibility for SAVE: The program was available to most federal loan holders, including those with undergraduate or graduate loans. Relief varied based on income and family size, with over eight million people enrolling and about 400,000 receiving some debt cancellation.
Current Status: With the SAVE plan on hold and interest on loans not accruing while the legal challenges proceed, borrowers are advised to monitor updates from the Education Department, which will provide information on the ongoing legal situation and potential impacts.
Next Steps: The Supreme Court has urged lower courts to expedite their review of the case. If legal challenges against the SAVE plan succeed, borrowers may have to revert to less favorable repayment options with higher costs.
For now, borrowers should stay informed and prepare for possible changes in their repayment plans as the legal battle over student loan forgiveness continues.