President Biden’s Student Loan Repayment Plan Update and Legal Challenges

President Biden’s Student Loan Repayment Plan Update

President Biden’s student loan repayment plan faced legal challenges recently, but a federal appellate court ruling on Sunday allowed certain components of the plan to continue operating. This ruling enables the administration to reduce payments for some borrowers by up to 50%, a benefit previously blocked by legal issues.

Legal Developments

• Two federal judges issued preliminary injunctions last week, pausing parts of the program called SAVE due to lawsuits filed by Republican-led states.
• The injunctions, issued in Kansas and Missouri, halted upcoming changes in payment amounts and new debt cancellations through the SAVE program.

Current Status

Despite the legal challenges, the Education Department announced a temporary pause in billing for certain borrowers in the SAVE program while recalculating their payment amounts. This affects over four million low-income borrowers, with more than 124,000 already receiving adjusted billing notices.

Recent Court Decision

The U.S. Court of Appeals for the 10th Circuit in Denver lifted the Kansas injunction, allowing the Biden administration to proceed with implementing the remaining parts of the SAVE program. This includes the reduction in payments for undergraduate borrowers, while the legal battle continues.