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Education Department to pause student loan payments for millions amid legal battle

Tom Robbins by Tom Robbins
July 19, 2024
in Investing
Education Department to pause student loan payments for millions amid legal battle
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US President Joe Biden speaks about student loan debt relief at Madison Area Technical College in Madison, Wisconsin, April 8, 2024. 

Andrew Caballero-Reynolds | AFP | Getty Images

The U.S. Department of Education says it will pause millions of student loan borrowers’ payments while it defends its relief plan against legal challenges.

Borrowers enrolled in the Biden administration’s new repayment plan, known as SAVE, will be placed “in an interest-free forbearance,” according to a statement from U.S. Secretary of Education Miguel Cardona.

A federal appeals court issued a ruling on Thursday blocking the entire plan, which the White House says roughly 8 million people are enrolled in.

Lawsuits by Republican-led states, including Arkansas, Florida and Missouri, argue that the Biden administration overstepped its authority with SAVE and essentially was trying to find a roundabout way to forgive student debt after the Supreme Court blocked its sweeping plan in June 2023.

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