Millions of student loan borrowers to see lower payments in July

WASHINGTON (NEXSTAR) – An appeals court in Colorado ruled the Biden administration can resume part of its plan to reduce student loan payments for borrowers.

The administration’s SAVE plan reduces the monthly payment for some borrowers from 10% of discretionary income to 5% and makes the monthly payment $0 for people who earn less than $32,800 among other changes.

The administration had a provision wiping out debt for people who originally borrowed less than $12,000 and made payments for at least 10 years but that portion of the plan is still blocked by a court.

“We’re trying to fix a broken system,” said U.S. Secretary of Education Miguel Cardona. “There are too many students in this country that have potential but are not born into wealth. They should also have access to higher education.”

Judges in Kansas and Missouri separately blocked the SAVE plan from going into effect. Several states sued the administration, arguing Secretary Cardona went beyond the authority granted to him by Congress.

“This is transferring $475 billion of debt from these students to the American taxpayer,” said Attorney General Kris Kobach in Kansas. “Only Congress can do that.”

Cardona vowed to continue fighting the ruling blocking the portion of the SAVE plan that forgave the loans under $12,000.

“All students who want to go to college should have an opportunity to go and they should be able to pay back their loans,” Cardona said.

The lower payment portion of the SAVE plan was due to take effect on July 1.

For the latest news, weather, sports, and streaming video, head to DC News Now | Washington, DC.