Biden’s SAVE Student Loan Repayment Plan Can Resume Amid Lawsuits, Appeals Court Says

Topline

A federal appeals court has said pieces of President Joe Biden's student loan repayment plan that were blocked by judges last week can continue, as challenges to the Saving on a Valuable Education (SAVE) plan work their way through the legal system—but Biden’s broader effort to forgive many loans en masse remains stymied by the courts.

An activist holds a cancel student debt sign as they gather to rally in front of the White House in Washington, DC, on Aug. 25, 2022. AFP via Getty Images

Key Facts

Biden's plan, which would cut many borrowers' payments in half, was initially set to take effect Monday before a judge in Kansas placed an injunction on the plan.

The 10th Circuit Court of Appeals halted that injunction in a brief ruling Sunday, meaning the program could theoretically move forward as planned.

Right now, borrowers are paying 10% of their discretionary income above 225% of the federal poverty line but, under the SAVE plan change, those payments are set to be cut to 5% (and anyone making $32,800 or less has a $0 monthly payment).

The appeals court ruling does not apply to the decision by a Missouri judge last week that blocked a plan to forgive some borrowers' loans after 10 years of repayments, instead of the 20 or 25 currently required (the Justice Department is expected to appeal that ruling as well).

Key Background

The Biden administration launched SAVE, an income-driven student loan repayment plan, in August—part of a larger gambit to ease student loan payments after Biden’s push to fully cancel many borrowers’ loans altogether was halted by the Supreme Court. The SAVE plan doesn’t immediately eliminate debts, but it calculates payments based on a borrower’s income and family size, not their loan balance, and helps move borrowers closer to loan forgiveness faster. The administration estimates more than 30 million borrowers would financially benefit from the plan, and roughly 8 million have signed up so far. Several Republican-led states have said the plan oversteps Biden's authority, warned it could financially harm lenders and accused the Biden administration of trying to sidestep the Supreme Court’s ruling against a separate student loan forgiveness program last year. Kansas Attorney General Kris Kobach said last week’s ruling was a "victory for the entire country."