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Fed Court Blocks Student Debt Plan     07/19 06:01

   A federal appeals court blocked the implementation of the Biden 
administration's student debt relief plan, which would have lowered monthly 
payments for millions of borrowers.

   WASHINGTON (AP) -- A federal appeals court blocked the implementation of the 
Biden administration's student debt relief plan, which would have lowered 
monthly payments for millions of borrowers.

   In a ruling Thursday, the 8th Circuit Court of Appeals granted a motion for 
an administrative stay filed by a group of Republican-led states seeking to 
invalidate the administration's entire student loan forgiveness program. The 
court's order prohibits the administration from implementing the parts of the 
SAVE plan that were not already blocked by lower court rulings.

   The ruling comes the same day that the Biden administration announced 
another round of student loan forgiveness, this time totaling $1.2 billion in 
forgiveness for roughly 35,000 borrowers who are eligible for the Public 
Service Loan Forgiveness program.

   The PSLF program, which provides relief for teachers, nurses, firefighters 
and other public servants who make 120 qualifying monthly payments, was 
originally passed in 2007. But for years, borrowers ran into strict rules and 
servicer errors that prevented them from having their debt cancelled. The Biden 
administration adjusted some of the programs rules and retroactively gave many 
borrowers credits towards their required payments.

   Borrowers who are enrolled in the SAVE plan, which was the subject of 
Thursday's ruling, will be placed into interest-free forbearance while the case 
works its way through the legal system, Education Secretary Miguel Cardona said 
Thursday.

   "Today's ruling from the 8th Circuit blocking President Biden's SAVE plan 
could have devastating consequences for millions of student loan borrowers 
crushed by unaffordable monthly payments if it remains in effect," Cardona said 
in a statement. "It's shameful that politically motivated lawsuits waged by 
Republican elected officials are once again standing in the way of lower 
payments for millions of borrowers."

   Two separate legal challenges to Biden's SAVE plan have worked their way 
through the courts. In June, federal judges in Kansas and Missouri issued 
separate rulings that blocked much of the administration's plan to provide a 
faster path towards loan cancellation and reduce monthly income-based repayment 
from 10% to 5% of a borrower's discretionary income. Those injunctions did not 
affect debt that had already been forgiven.

   The 10th Circuit Court of Appeals issued a ruling that allowed the 
department to proceed with the lowered monthly payments. Thursday's order from 
the 8th circuit blocks all aspects of the SAVE plan.

   The Education Department said it was reviewing the ruling. "Our 
Administration will continue to aggressively defend the SAVE Plan -- which has 
been helping over 8 million borrowers access lower monthly payments, including 
4.5 million borrowers who have had a zero dollar payment each month," the 
administration said. "And, we won't stop fighting against Republican elected 
officials' efforts to raise costs on millions of their own constituents' 
student loan payments."

 
 
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