Federal Appeals Court Blocks Biden's Student Debt Relief Plan

A federal appeals court has blocked the Biden administration's student debt relief plan, halting parts of the SAVE plan that aimed to reduce monthly payments for millions. Despite this, the administration announced $1.2 billion in loan forgiveness for Public Service Loan Forgiveness program eligible borrowers, amidst ongoing legal battles.

A federal appeals court has impeded the implementation of the Biden administration's student debt relief plan designed to lower monthly payments for millions of borrowers.

On Thursday, the 8th Circuit Court of Appeals approved a motion for an administrative stay brought by a coalition of Republican-led states attempting to invalidate the administration's student loan forgiveness programme. The court's order restricts the administration from enacting the elements of the SAVE plan not already hindered by lower court decisions.

Coinciding with the ruling, the Biden administration revealed an additional $1.2 billion in student loan forgiveness for approximately 35,000 borrowers eligible for the Public Service Loan Forgiveness programme.

Originally enacted in 2007, the PSLF programme provides relief to public servants such as teachers, nurses, and firefighters who make 120 qualifying monthly payments. However, many borrowers faced difficulties due to stringent rules and servicer errors. The Biden administration revised several programme rules and retroactively credited many borrowers toward their required payments.

Two separate legal challenges to the SAVE plan have progressed through the courts. In June, federal judges in Kansas and Missouri issued rulings obstructing much of the administration's plan to expedite loan cancellation and decrease income-based repayment from 10% to 5% of discretionary income. These injunctions did not pertain to already forgiven debt.

The 10th Circuit Court of Appeals permitted the department to continue with lowered monthly payments. Thursday's ruling by the 8th Circuit Court, however, suspends all aspects of the SAVE plan.

The Education Department is reviewing the decision. "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 with zero-dollar monthly payments," the administration stated. "And, we won't stop fighting against Republican elected officials' efforts to raise costs on millions of their own constituents' student loan payments."

(With inputs from agencies.)