Student Borrower Protection Center (SBPC)
WASHINGTON, D.C. — The Eighth Circuit has ruled in favor of right-wing Attorneys General’s motion to block President Biden’s Saving on a Valuable Education repayment plan (the SAVE plan). The order enjoins millions of student loan borrowers from accessing lower monthly payments and cancellation under SAVE. This income-driven repayment plan has been available to borrowers since August 2023 and has already lowered monthly payments for millions of people and cancelled debts in full for hundreds of thousands.
In response, SBPC Executive Director Mike Pierce released the following statement:
“Three Republican-appointed judges have decided that it is in the public interest to leave millions of people in limbo and break the student loan system.
There is only one way to protect borrowers from this nakedly partisan chaos: Secretary Cardona must suspend payments for everyone now.”
Background
On March 28, 2024, a coalition of 11 states led by Kansas Attorney General Kris Kobach sued in federal court to stop the SAVE plan. On April 9, 2024, this lawsuit was filed by another coalition of seven states led by the Missouri Attorney General. These collective states represent about one quarter of the borrowers who have already enrolled in the plan—with more than 2.5 million enrolled residents—but seek to invalidate the SAVE plan for the entire country.
About the SAVE plan
The SAVE plan is one of several options for repaying federal student loans. It sets borrowers’ monthly payments based on their income, resulting in low or even $0 payments for low-income borrowers. Most borrowers’ monthly payments will be halved under SAVE. Of the more than 8 million borrowers who have enrolled, 4.6 million have a $0 monthly payment. Additionally, after 20 or 25 years, borrowers enrolled in SAVE can have their remaining balance cancelled. For borrowers who initially borrowed up to $12,000, their remaining balance will be cancelled after 10 years.
The U.S. Department of Education has already identified nearly half a million borrowers who are eligible to have their debts cancelled under SAVE, totaling nearly $5.5 billion in cancelled debt that will be put back into local economies, used to start businesses or buy homes, or just help hardworking families cover their basic needs.
The SAVE plan is not a novel use of executive power. Congress gave the Department of Education the authority to make income-driven repayment plans in 1993 and the first income-driven plan was created in 1994. The SAVE plan is the fourth plan based on this authority in recent years and has been available since August 2023.
Further Reading
Letter to Cardona from AFT and SBPC calling on Secretary Cardona to suspend all monthly payments, interest charges and debt collection in response to these right-wing lawsuits:
https://protectborrowers.org/…/Letter_AFT-SBPC-to…
A legal analysis by the University of California Student Loan Law Initiative on the legal authority to suspend payments for all borrowers:
https://www.slli.org/memo-hea-authority-and-extending-the…
SBPC blog explaining the lawsuits by 18 states to block SAVE: The Biden Administration’s Latest Effort to SAVE Borrowers and the States that are Hell-Bent to Stop It
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About Student Borrower Protection Center
Student Borrower Protection Center (SBPC) is a nonprofit organization focused on eliminating the burden of student debt for millions of Americans. We engage in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance racial and economic justice.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.