Millions of student loan borrowers will have their loan payments paused after a court ruled to halt President Biden’s Saving on Valuable Education (SAVE) plan.
“Borrowers enrolled in the SAVE Plan will be placed in an interest-free forbearance while our Administration continues to vigorously defend the SAVE Plan in court," Education Secretary Miguel Cardona posted on social platform X on Friday.
"The Department will be providing regular updates to borrowers affected by these rulings in the coming days,” he added.
Payments will be paused for eight million borrowers after the U.S. Court of Appeals for the 8th Circuit ruled in favor of Republican-led states that sued the Biden administration over the new income-driven repayment program.
The administrative stay by the court means the Department of Education can not implement its repayment plan until future notice.
“The Court granted our emergency motion to BLOCK Joe Biden’s entire illegal student loan plan, which would have saddled working Americans with half-a-trillion dollars in Ivy League debt. HUGE win for every American who still believes in paying their own way,” said Missouri Attorney General Andrew Bailey (R).
This is one of two cases in the courts against the SAVE plan. The other challenge, including Alaska, South Carolina and Texas, has been unsuccessful and the Republican-led states in that situation have requested an emergency ruling from the Supreme Court to stop the program.
The SAVE plan’s implementation began last year, basing student loan payments on household income and size. The second half of the plan was supposed to begin this July where monthly payments would go from 10 percent of discretionary income to 5 percent.
“It’s shameful that politically motivated lawsuits waged by Republican elected officials are once again standing in the way of lower payments for millions of borrowers,” Cardona said.
