A Major Part of Biden’s Student Loan Repayment Plan Is Restored

Major components of President Joe Biden’s student loan repayment plan can continue to operate as lawsuits challenging it wind through the legal system, a federal appellate court ruled Sunday. That frees the administration to cut certain borrowers’ payments by as much as half, a benefit that had been previously scheduled but blocked.

The order, from the 10th U.S. Circuit Court of Appeals, in Denver, is the latest twist in a saga that began to unfold last week after two federal judges temporarily suspended parts of the plan known as SAVE. That program, which has about 8 million enrollees, ties borrowers’ monthly payment amounts to their income and household size.

Two judges, one in Kansas and another in Missouri, last week issued separate preliminary injunctions, which are tied to lawsuits that were filed in the spring by two groups of Republican-led states that seek to upend the SAVE program.

The Kansas order suspended parts of the program that were not yet in place, including a big decrease in monthly payments for people with undergraduate debt — to 5% of their discretionary income from 10% — which was to take effect July 1. The judge in Missouri blocked new debt cancellation through the SAVE program, though legal experts initially said it wasn’t clear how widely that ruling should be interpreted.

To comply with the Kansas district court’s injunction, the Education Department said Friday that it would pause monthly bills for borrowers in the SAVE program who are required to make payments as it reconfigured those amounts once again. (More than 4 million low-income borrowers qualify for $0 monthly payments.) More than 124,000 borrowers had already received billing notices calculated with their new lower payments, the Education Department said in a court filing.

But now that an appeals court has temporarily lifted the Kansas injunction, the Biden administration can move forward and roll out the rest of the SAVE program, including the reduction in payments for undergraduate borrowers, while it appeals the preliminary injunction.

This article originally appeared in The New York Times .