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Courts Block Portions of Biden's SAVE Repayment Plan

By Hugh T. Ferguson, NASFAA Managing Editor

A pair of federal judges on Monday issued separate injunctions that have blocked the Department of Education (ED) from fully implementing its new Saving on a Valuable Education (SAVE) student loan repayment plan.

It is currently unclear the full extent to which the rulings will impact the new income-driven repayment plan, but provisions set to be fully implemented as a part of the department's final rule will no longer go into effect on July 1, 2024. One of those provisions included calculating monthly payments by using half the current percentage of discretionary income for undergraduate borrowers, lowering the rate from 10% to 5%.

In response to the decisions from the Missouri and Kansas District Court, Secretary of Education Miguel Cardona said the department would continue to review the rulings and work to ensure that borrowers have access to lower monthly student loan payments.

“We strongly disagree with the Kansas and Missouri District Court rulings, which block components of the SAVE Plan that help student loan borrowers have affordable monthly payments and stay out of default. The Department of Justice will continue to vigorously defend the SAVE Plan," Cardona said in a statement Monday evening.

Cardona went on to argue that the department has the authority to carry out the program aimed at providing breathing room for borrowers and allow those who are "at-risk" to reach forgiveness faster.

"But Republican elected officials and special interests sued to block their own constituents from being able to benefit from this plan – even though the Department has relied on the authority under the Higher Education Act three times over the last 30 years to implement income-driven repayment plans," Cardona said.

Meanwhile Sen. Bill Cassidy (R-La.), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, said that the administration has prioritized "student loan schemes" at the expense of the 2024-25 FAFSA rollout.

“Just like Biden’s other student loan schemes, this IDR policy does not ‘forgive’ debt," Cassidy said. "It transfers the burden of $559 billion in debt from those who willingly took it on to Americans who chose to not go to college or already sacrificed to pay off their loans.”

 

Publication Date: 6/25/2024


James C | 6/25/2024 1:57:08 PM

The President doesn't have the authority to expand forgiveness on his own without the authority of Congress. All of the false hope this administration has put forth regarding forgiveness is going to backfire on him. And no I am not on the other team. I am just repeating what Nancy Pelosi had been saying prior to these forgiveness executive actions.

Luis J | 6/25/2024 12:3:57 PM

If the government has enough money to give to countries, why we can not use that money to help our own people, regardless they chose or not to go to college. Maybe the kid of the father that decided not to go to college, wants to go to college, and would have been nice to have some relief.

Jeff A | 6/25/2024 10:1:51 AM

ED's policy continues to get challenged and beat in court. BDR, Title IX, SAVE, Mass forgiveness...GE hopefully next. It seems like extreme policy is being prioritized over reasonable policy for political reasons. This creates false hope, confusion, and frustration for students and institutions. I'm not sure this wasn't the expectation. It seems a sincere desire to make incremental and reasonable progress to improve higher ed is sacrificed for political gain.

Cordell C | 6/25/2024 9:11:05 AM

Both sides are somewhat right in this situation. It definitely feels like ED prioritized loan forgiveness over the FAFSA rollout, and all of us FAA's have felt the effects of that. However, Cardona has a point about relief for borrowers and letting ED run their plans. The American Taxpayer hasn't funded the government for decades, so I'm not sure why people even try to use that as an argument anymore.

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