Student loan payments will be paused for 8 million borrowers after appeals court temporarily halts Biden’s repayment plan

Washington CNN —

The Department of Education will pause student loan payments for 8 million borrowers after a federal appeals court temporarily blocked a repayment plan that the Biden administration launched last year.

The fate of the plan, known as SAVE (Saving on a Valuable Education), is in flux as courts across the country consider two legal challenges brought by several Republican-led states.

“Borrowers enrolled in the SAVE Plan will be placed in an interest-free forbearance while our administration continues to vigorously defend the SAVE Plan in court,” Education Secretary Miguel Cardona said in a statement.

Payments are not required during a forbearance, but a borrower is not making any progress toward paying down their debt.

“The department will be providing regular updates to borrowers affected by these rulings in the coming days,” Cardona said.

Reducing student loan debt has been a priority for the Biden administration and the SAVE plan is one of the most significant policy changes it has made.

Like other existing student loan repayment plans, SAVE ties a borrower’s monthly payments to their income and family size. But SAVE is the most generous plan for low-income borrowers, offering lower payments and a faster path to student loan forgiveness. More than half of the 8 million people currently enrolled in SAVE have $0 monthly payments.

The SAVE plan opened last year, after the Supreme Court struck down Biden’s sweeping, one-time student loan forgiveness program before it took effect.

Legal challenges to SAVE

Two groups of GOP-led states filed lawsuits earlier this year, arguing that the Biden administration does not have the legal authority to implement SAVE. The government’s lawyers say they