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Court allows White House to resume plan lowering monthly student loan payments

The Biden administration can begin cutting student loan payments by half for millions of borrowers in July.
Joe Biden
Posted at 10:08 AM, Jul 02, 2024

A federal appeals court is allowing the Biden administration to move forward with plans to cut federal student loan payments for millions of borrowers this month.

The move comes days after a lower court judge blocked the Biden administration from implementing a rule that was scheduled to go into effect July 1. The U.S. 10th Circuit Court of Appeals issued an emergency stay at the request of the White House while the legal back and forth continues.

In June in a case out of Kansas, a federal judge temporarily blocked the Biden administration from further cutting student loan payments from 10% of a borrower's discretionary income to 5% on July 1 for those signed up under the SAVE Plan. The 10th Circuit Court of Appeals said it can now cut payments starting in July.

The SAVE Plan was created by executive order in 2023 after the administration failed in its efforts to forgive up to $20,000 of federal student loan debt per borrower.

Related story: Judges block some of Biden's student loan repayment plan

The SAVE Plan provides some borrowers with lower income-driven repayments, while the plan also calls for forgiving some borrowers' loans outright. When the Biden administration first enacted the SAVE Plan last year, borrowers with only undergraduate loans began repaying loans at 10% of their discretionary income. What is considered discretionary income increased from 150% to 225% of the federal poverty level under Biden's order.

In a separate court ruling in June, the Biden administration was temporarily blocked from using the SAVE Plan to outright forgive student loan accounts. That decision remains in place, meaning for now, the Biden administration will not be able to use the SAVE Plan to enact forgiveness.

Republicans have argued that forgiving student loans comes at a cost to those who didn't attend college.

“Once again, the Biden administration has decided to steal from the poor and give to the rich," said Kansas Attorney General Kris Kobach. "He is forcing people who did not go to college, or who worked their way through college, to pay for the loans of those who ran up exorbitant student debt. This coalition of Republican attorneys general will stand in the gap and stop Biden."