8th Circuit Court Blocks SAVE Student Loan Repayment Plan: What Borrowers Need to Know

The recent ruling by the 8th U.S. Circuit Court of Appeals blocking the income-driven student loan repayment plan Saving on a Valuable Education (SAVE) has left millions of borrowers in limbo. With about 8 million borrowers enrolled in SAVE, the impact of this decision is significant, affecting 1 in 5 student loan borrowers.

The decision to block the plan in its entirety has put a pause on monthly payments for SAVE borrowers until the legal situation is resolved, which could take months. This has caused uncertainty and frustration among borrowers who were expecting relief from unaffordable monthly payments.

U.S. Education Secretary Miguel Cardona expressed disappointment in the ruling, calling it a setback for millions of borrowers who are struggling with student loan debt. He emphasized the importance of lower payments for borrowers and criticized the politically motivated lawsuits that have hindered the implementation of the SAVE plan.

For borrowers enrolled in SAVE, the Education Department is offering interest-free forbearance indefinitely. This means that payments are not due during this period, providing some relief for those who owe monthly payments. Borrowers are advised to ensure that their contact information is up to date to receive updates on the situation.

The Education Department has not yet confirmed if borrowers will receive credit toward income-driven repayment loan forgiveness or Public Service Loan Forgiveness during this payment pause. Additionally, it is unclear if borrowers can still apply for IDR plans, including SAVE, as the online application was inaccessible as of Friday morning.

The legal battle surrounding the SAVE plan has been ongoing since March when Republican-led states filed lawsuits to stop the plan, arguing that President Biden did not have the authority to cancel student debt without congressional approval. The conflicting rulings from different circuit courts have added to the uncertainty surrounding the future of the SAVE plan.

As the situation continues to unfold, borrowers are advised to stay informed and be prepared for potential changes to their repayment plans. The possibility of the case reaching the U.S. Supreme Court adds another layer of complexity to the situation, leaving borrowers in a state of uncertainty.

Overall, the ruling by the 8th Circuit Court of Appeals has put a temporary halt to the SAVE plan, leaving borrowers in a state of limbo. As the legal battle continues, borrowers are encouraged to stay informed and be prepared for any potential changes to their repayment plans.