Millions of student borrowers facing college loan payments are getting temporary relief following court decisions this summer blocking implementation of the federal debt relief program known as SAVE.
Their payments and any interest are effectively paused – at least while a court fight plays out between Republican-led states suing to stop the program and the Biden administration that wants loan relief to move forward.
That respite still leaves borrowers’ prospects for freeing themselves from debt highly uncertain, especially if the program dies.
The U.S. Department of Education placed those loans in forbearance following decisions returned this month and last by the United States Court of Appeals for the 8th Circuit in St. Louis. They involve litigation brought by several Republican-led states seeking to invalidate Biden’s overall student debt forgiveness plans.
A temporary stay, granted July 18, halted portions of the Saving on a Valuable Education (SAVE) program that were not already on hold from earlier court rulings.
Another ruling Friday by the 8th Circuit extended that order.
Both are seen as serious blows to SAVE, an income-driven repayment plan intended to lower debt payments and eventually forgive outstanding balances after a number of years for eligible borrowers.
U.S. Secretary of Education Miguel Cardona contends that the rulings will have devastating impacts on students facing unwieldy payments. He outlined his response in statements posted to the agency’s website.
“Borrowers enrolled in the SAVE Plan will be placed in an interest-free forbearance while our Administration continues to vigorously defend the SAVE Plan in court,” he said.
Later updates delivered Friday and Monday to some 8 million borrowers enrolled in SAVE clarified what the pause means.
“The time in forbearance will not count toward Public Service Loan Forgiveness or Income-Driven Repayment (IDR) loan forgiveness, ” it stated. “SAVE borrowers will not accrue interest on their loans during the forbearance. SAVE borrowers will be notified about their forbearance by their loan servicers.”
The White House announced the SAVE repayment plan on June 30, 2023, the same day the U.S. Supreme Court struck down the president’s broader loan forgiveness plans.
Justices in the conservative led court ruled 6-3 that Biden lacked constitutional authority.
Several states, among them Missouri, have since challenged the SAVE program and the government’s authority to administer it on grounds including that it violates separation of powers.
On Friday, in an unsigned decision, the court again sided with the plaintiffs.
“This injunction will remain in effect until further order of this court or the Supreme Court of the United States,” it said.
Missouri Attorney General Andrew Bailey said the program would cost taxpayers enormous sums. He hailed the decision and linked to it from the attorney general’s web site.
“This court order is a stark reminder to the Biden-Harris Administration that Congress did not grant them the authority to saddle working Americans with $500 billion in someone else’s Ivy League debt,” he said in a statement. “This is a huge win for every American who still believes in paying their own way.”
Cardona had a different take.
It’s shameful that politically motivated lawsuits waged by Republican elected officials are once again standing in the way of lower payments for millions of borrowers, he said Monday.
The administration strongly disagrees with the Eighth Circuit’s decision, Cardona said.
“If allowed to stand, this ruling would force millions of borrowers to pay hundreds of dollars more each month. And the decision’s reasoning could also deny loan forgiveness to individuals who were expecting it after up to 25 years of faithful repayments. The ruling rejects a practice of providing loan forgiveness that goes back 30 years.”
He said the administration is not backing down.
“Already, we’ve approved $169 billion in relief for nearly 4.8 million Americans, including teachers, veterans, and other public servants, students who were cheated by their colleges, borrowers with disabilities, and more,” Cardona said.
Bill Schackner is a TribLive reporter covering higher education. Raised in New England, he joined the Trib in 2022 after 29 years at the Pittsburgh Post-Gazette, where he was part of a Pulitzer Prize-winning team. Previously, he has written for newspapers in Connecticut, New York, Pennsylvania and Rhode Island. He can be reached at bschackner@triblive.com.
