CONNECTICUT, USA — Anyone who received an email notifying them of a change to their student loan payments is not alone.
Late last month, a federal appeals court temporarily blocked a Biden-Harris administration student loan repayment plan known as SAVE, which stands for Saving on a Valuable Education.
In response, the Department of Education placed millions of loan repayments into forbearance, which means while borrowers won’t have to make a payment and will not accrue any interest, they are also not chipping away at the debt they owe.
In an Aug. 12 statement, Education Secretary Doctor Miguel Cardona said, “the administration strongly disagrees with the eighth circuit’s decision blocking the Biden administration’s save plan. If allowed to stand, this ruling would force millions of borrowers to pay hundreds of dollars more each month. 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.”
Massachusetts-based credit counselor Martin Lynch said that in the meantime, borrowers have limited options.
“If the borrower decides to make payments under a different income-driven plan, they’d first need to change plans with their servicer,” said Lynch, of Cambridge Credit Counseling. “As the DOE isn’t processing those applications at the moment, you must contact the servicer directly to move from save to a different income-driven plan.”
The issue with processing the applications is that it is a lengthy process and the DOE is not accepting any additional applications for the Pay As You Earn plan. That leaves borrowers with just two remaining income-based repayment plans to choose from.
The DOE said it will continue to provide updates to those impacted by the ruling in the coming days. According to Secretary Cardona, the Biden-Harris administration has already approved $169 billion in relief for nearly 4.8 million Americans.
MORE NEWS: Biden administration forgives another $1.2 billion in student loans: Here's who qualifies
Kaelee Collins is a multimedia journalist for FOX61 News. She can be reached at kcollins@fox61.com. Follow her on X, and Instagram.
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