US appeals court blocks implementation of Biden’s student debt relief plan

The PSLF program, which provides relief for teachers, nurses, firefighters and other public servants who make 120 qualifying monthly payments, was originally passed in 2007. But for years, borrowers ran into strict rules and servicer errors that prevented them from having their debt cancelled. The Biden administration adjusted some of the programmes rules and retroactively gave many borrowers credits towards their required payments.

 

Two separate legal challenges to Biden’s SAVE plan have worked their way through the courts. In June, federal judges in Kansas and Missouri issued separate rulings that blocked much of the administration’s plan to provide a faster path towards loan cancellation and reduce monthly income-based repayment from 10 per cent to 5 per cent of a borrower’s discretionary income. Those injunctions did not affect debt that had already been forgiven.

The 10th Circuit Court of Appeals issued a ruling that allowed the department to proceed with the lowered monthly payments. Thursday’s order from the 8th circuit blocks all aspects of the SAVE plan.

The Education Department said it was reviewing the ruling. Our Administration will continue to aggressively defend the SAVE Plan which has been helping over 8 million borrowers access lower monthly payments, including 4.5 million borrowers who have had a zero dollar payment each month, the administration said. “And, we won’t stop fighting against Republican elected officials’ efforts to raise costs on millions of their own constituents’ student loan payments.

First Published: Jul 19 2024 | 7:45 AM IST