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Judges Dismiss Some of Biden’s Repayment Plan for Student Loans

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President Biden’s new student loan repayment scheme has been temporarily stopped in parts by two federal judges in Kansas and Missouri, a significant development that would impact millions of federal borrowers. Particularly affected by the rulings is the SAVE income-driven repayment plan.

SAVE borrowers will keep paying payments; however, as of July 1, those with undergraduate debt will no longer have their payments halved, which will come as a disappointment to those who had been hoping for this respite.

The decisions stem from various challenges brought by states with Republican-led administrations against the SAVE program, which is a key component of Biden’s plan to help student debtors. Additionally, these opponents had opposed Biden’s $400 million debt cancellation scheme, which was overturned by the Supreme Court in June of last year.

Co-director of advocacy at the National Consumer Law Center Abby Shafroth attacked the injunctions, claiming they are a cynical attempt to prevent working-class and middle-class Americans from making affordable loan payments during an election year.

Press Secretary Karine Jean-Pierre, speaking on behalf of the White House, stated that the government firmly disagrees with the court rulings and reiterates its commitment to utilizing all resources at its disposal to offer relief to borrowers and students.

Eleven states, led by Kansas, filed the complaints initially, and later Missouri and six more states joined in. They claimed that the repayment plan was an attempt at indirect debt cancellation and that the administration had overreached its power.

Since August, eight million borrowers have been registered in the SAVE program, which is based on a 30-year-old plan that links monthly payments to income and household size. With almost four million borrowers eligible for a $0 monthly payment, it offers more generous terms and a higher price tag than prior schemes.

Partial injunctions were issued by Kansas Judge Daniel D. Crabtree and Missouri Judge John A. Ross. While Ross permitted benefits like lower monthly payments and limited interest accrual to continue, he rejected provisions enabling debt forgiveness, according to Crabtree, who pointed out that just three states had the standing to appeal.

Scott Buchanan of the Student Loan Servicing Alliance said he was prepared to follow court instructions, but the Education Department did not immediately respond to requests for comment. These decisions further confuse borrowers by adding complication to a repayment scheme that already causes stress.

The temporary orders have been hailed by Republican politicians, including as Senator Bill Cassidy of Louisiana, who has criticized the income-driven repayment plan for putting the debt load onto taxpayers.

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