Appeals court allows part of Biden student loan repayment plan to go forward

WASHINGTON (AP) — A federal appeals court has allowed the U.S. Education Department to move ahead with a plan to lower monthly payments for millions of student loan borrowers, putting on hold a ruling last week by a lower court.

The ruling from the 10th U.S. Circuit Court of Appeals puts back on track a central part of President Joe Biden’s efforts to address student debt — a rule that lowers from 10% of discretionary income to 5% the amount that some borrowers qualifying for a repayment plan need to pay.

The reduced payment threshold was set to take effect July 1, but federal judges in Kansas and Missouri last week blocked much of the administration’s student loan repayment plan in two separate rulings. The appeals court ruling on Sunday means the department can move ahead with the reduced payments already calculated.

The rulings have created a difficult environment for borrowers to navigate, said Persis Yu, deputy executive director of the Student Borrower Protection Center, which advocates for eliminating student debt. The stay granted by the 10th Circuit is temporary and subject to appeal, Yu said, leaving many borrowers in the dark about future financial obligations.

“Borrowers are having to make decisions right now about their financial lives, and they don’t know the very basic information that they need in order to make informed decisions,” Yu said.

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