Biden could move forward with a plan to lower monthly payments for millions of student loan borrowers
An appeals court has allowed the US Department of Education to move forward with a plan to lower monthly payments for millions of borrowers, reversing a lower court ruling last week.
The decision by the 10th U.S. Circuit Court of Appeals reverses a key part of President Joe Biden’s efforts to tackle student debt – a law that lowered from 10% of income to 5% the amount some borrowers qualify for the repayment plan. the need to pay.
The reduced repayment threshold was set to go into effect on July 1, but federal judges in Kansas and Missouri last week blocked a large portion of the administration’s student loan repayment plan in two separate rulings. Sunday’s decision means the department can continue with the reduced payments that have already been calculated while it is still filing an appeal.
These decisions have created a difficult situation for borrowers to navigate, said Persis Yu, deputy director of the Student Borrower Protection Center, which promotes the elimination of student loans. The stay granted by the 10th Circuit is temporary, Yu said, leaving many borrowers in the dark about future financial obligations.
“Borrowers have to make decisions right now about their financial health, and they don’t know the basic information they need to make informed decisions,” said Yu.
The Biden administration created the SAVE program last year to replace other existing reimbursement programs offered by the federal government. It allowed many to qualify for lower payments, and forgiveness was offered to borrowers who had made payments for at least 10 years and originally borrowed $12,000 or less.
US Education Secretary Miguel Cardona said the Biden administration remains committed to “our work to fix the broken student loan system and make college affordable for more Americans.”
The appeals court decision does not affect an order issued by a federal judge in Missouri, which prevents the Department of Education from forgiving the loan balance going forward.
The orders are the result of lawsuits from Republican-led states seeking to shut down the entire Biden administration’s loan forgiveness program, which began being available to borrowers in the summer of 2023, and at least 150,000 have had their loans canceled. The suing states said the administration’s plan was a solution after the Supreme Court struck down the first student loan forgiveness program earlier that year.
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