A federal appeals court has allowed the U.S. Education Department to move forward with a plan to lower monthly payments for millions of student loan borrowers, a key part of President Joe Biden’s efforts to address student debt. The plan reduces the amount borrowers need to pay from 10% to 5% of discretionary income. This ruling from the 10th U.S. Circuit Court of Appeals reverses a decision by lower courts that blocked the administration’s student loan repayment plan.
Persis Yu, deputy executive director of the Student Borrower Protection Center, expressed concerns that the temporary stay granted by the appeals court leaves borrowers in uncertainty about their financial obligations. The Biden administration implemented the SAVE plan last year to provide lower payments and forgiveness options for borrowers. Education Secretary Miguel Cardona reiterated the administration’s commitment to fixing the student loan system and making college more affordable.
However, an injunction issued by a Missouri federal judge still stands, preventing the Education Department from forgiving loan balances moving forward. This injunction is part of lawsuits filed by Republican-led states challenging the Biden administration’s loan forgiveness program. The states argued that the administration’s plan was a workaround after the Supreme Court rejected the original loan forgiveness plan. Despite the legal challenges, the Biden administration continues to work towards addressing the student debt crisis in the country.
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