The Education Department will suspend student loan payments and interest for around 8 million borrowers following a Thursday court order that blocked the Biden administration’s latest repayment program.
Agency officials announced they would freeze the loans of borrowers enrolled in the program, known as SAVE, until appeals are resolved in court. The plan aims to lower monthly payments for nearly all participants and offer loan forgiveness for certain long-time borrowers. This order disrupts President Joe Biden’s commitment to address the burden of high loan payments on indebted students.
According to POLITICO:
“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,” said U.S. Secretary of Education Miguel Cardona in a statement. He warned that the order would have “devastating consequences for millions of student loan borrowers crushed by unaffordable monthly payments if it remains in effect.”
Federal district judges in Kansas and Missouri blocked key provisions of the plan in June. However, a federal appeals court put that decision on hold in July, allowing the Biden administration to proceed with its plan for lower monthly payments. Thursday’s unsigned order from the 8th Circuit Court of Appeals fully blocks the program for an unspecified period.
Critics argue that the plan constitutes government overreach and unfairly burdens taxpayers.
“The chaos and destruction this administration is inflicting on the nation’s student loan system is unprecedented,” said House Education and Workforce Committee Chair Virginia Foxx (R-N.C.). “Is it hubris, ignorance, or indifference that encourages the Biden administration to move forward with an illegal agenda that has dangerous repercussions?”
This is not the first instance of the Education Department freezing payments due to lawsuits. In June, officials paused payments for about 3 million borrowers after a federal judge in Kansas blocked the administration from reducing them, a component of the plan that was set to take effect in July. Although an appeals court later reversed the decision, the department has paused payments again for those borrowers and others in the program. Officials have not yet specified when the freeze will take effect.
Mike Pierce, the executive director and co-founder of the Student Borrower Protection Center, said the department had few alternatives. “It’s the only way you can be sure you’re not violating this court order,” he said.