Update on Biden Administration’s SAVE Program and Lawsuits: What Borrowers Need to Know

Are you a student loan borrower eagerly awaiting the Biden Administration’s repayment plan to cut your monthly payments in half? Well, it looks like you’ll have to wait a little longer. Federal judges in Kansas and Missouri have issued preliminary injunctions blocking parts of the Saving on a Valuable Education (SAVE) program, putting a halt to the plan while lawsuits make their way through the courts.

The SAVE program, which was set to cap monthly payments at 5% of a borrower’s discretionary income starting on July 1, will not be implemented as planned. This news may come as a disappointment to many, but it’s important to understand the reasons behind these legal challenges.

The lawsuits filed by more than a dozen states claim that President Biden exceeded his authority in implementing the plan and that the program’s cost could have negative economic impacts on states. These legal battles have put a pause on any further loan forgiveness under SAVE until the issues are resolved.

Despite the setbacks, the parts of SAVE that have already been put into effect will remain in place. This means that the more than 8 million Americans currently enrolled in the program should not see any changes to their monthly payment amounts. Additionally, borrowers who have already had their loans forgiven will not be affected by the injunctions.

The White House introduced the SAVE program last summer after a previous student loan forgiveness initiative was struck down by the Supreme Court. Since then, $5.5 billion in student loan debt has been canceled for 414,000 borrowers under SAVE.

As the legal battles continue, current SAVE plan borrowers are advised to sit tight and wait for further developments. Your monthly payments will remain the same until the lawsuits are resolved. While the planned reduction in undergraduate loan payments from 10% to 5% will not happen in July, there is still hope for relief in the future.

In the meantime, if you’re in need of financial assistance for your education, consider exploring private student loan options. Forbes Advisor can help you find the best private student loans of 2024 to support your academic journey. Stay informed, stay hopeful, and keep pushing forward towards your educational goals.