Court allows key part of Biden student loan relief plan to resume

A federal appeals court ruled Sunday that a key part of President Biden’s student loan forgiveness plan can resume after an injunction was placed on the initiative.

The previous injunction on the Saving on a Valuable Education (SAVE) repayment plan said that the administration could not lower monthly payments or forgive some student debt. 

The 10th Circuit U.S. Court of Appeals lifted the injunction on the part that would lower monthly payments, allowing them to drop from 10 percent of discretionary income to 5 percent this month.

The administration did place some borrowers in forbearance while the legal issues are worked out.  

“While we are frustrated by the continued legal challenges brought to limit borrower relief, we are pleased to see the Department of Education take quick and decisive action by placing 3 million borrowers in an administrative forbearance,” said Natalia Abrams, president of Student Debt Crisis Center.  

Around 8 million Americans signed up for the SAVE plan after it was implemented in the fall as part of President Biden’s wider efforts to bring relief to student loan borrowers.  

Back in October, under the plan, the government raised the amount of income protected from 150 percent above the federal poverty guidelines to 225 percent. It also makes it so borrowers who pay the principal balance on their loans monthly will not be penalized for the growth of unpaid interest.

—Updated at 1:29 p.m.