Federal judges in Kansas and Missouri issued rulings Monday, June 24, that blocked key parts of President Joe Biden’s student debt relief plan, specifically the aspects that adjust payment amounts based on a borrower’s income. As a result, further implementation of the SAVE program is now halted.
This program, which has been operational for nearly a year, links a borrower’s monthly payment amount to their income. The blocked second phase of the plan would have reduced monthly payments from 10% of a borrower’s discretionary income to 5%.
The rulings also pauses any further debt cancellation for individuals who took out smaller initial loans and have been making payments for over 10 years. Despite these rulings, the White House said it remains committed to supporting students and borrowers.
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“Today’s rulings won’t stop our administration from using every tool available to give students and borrowers the relief they need,” White House press secretary Karine Jean-Pierre said in a statement.
It’s important to note that the SAVE Plan, unveiled by Biden in 2022 as part of a larger $430 billion initiative to fulfill a campaign promise, aimed to cancel up to $20,000 in debt for up to 43 million Americans. However, this initiative was blocked by the conservative-majority U.S. Supreme Court in June 2023.
[karah rucker]
TWO FEDERAL JUDGES IN KANSAS AND MISSOURI HAVE BLOCKED KEY ASPECTS OF PRESIDENT JOE BIDEN’S STUDENT DEBT RELIEF PLAN THAT LOWERS PAYMENTS.
MONDAY’S RULINGS WILL STOP THE BIDEN ADMINISTRATION FROM ANY FURTHER IMPLEMENTATION OF ITs “SAVE PROGRAM” — THE PLAN THAT TIES HOW MUCH SOMEONE PAYS EACH MONTH TO WHAT THEIR INCOME IS.
THE PLAN HAS BEEN IN PLACE FOR ALMOST A YEAR.
THIS MEANS THE SECOND PHASE OF THE PLAN — WHICH WOULD’VE REDUCED MONTHLY PAYMENTS FROM 10 PERCENT OF A BORROWER’S DISCRETIONARY INCOME TO 5 PERCENT — IS ON PAUSE.
SO IS ANY FURTHER CANCELLATION OF DEBT FOR PEOPLE WHO TOOK OUT SMALLER INITIAL LOAN PAYMENTS AND HAVE BEEN PAYING FOR 10-PLUS YEARS.
HOWEVER — THE 8 MILLION PEOPLE WHO ARE ALREADY ENROLLED — CAN KEEP USING THE SAVE PLAN UNTIL THE CASES ARE FULLY LITIGATED.
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