Federal student loan payments for about 8 million Americans will stay on hold for at least another six months, the U.S. Department of Education confirmed on Monday.
As first reported by CNBC, the decision impacts those enrolled in the White House’s “Saving on a Valuable Education,” or SAVE, plan, which is temporarily blocked by a federal appeals court. Those who signed up for the plan are excused from their monthly payments and will be put in an interest-free general forbearance, a spokesperson for the agency told CBS MoneyWatch.
The 8 million borrowers in SAVE, and anyone who has applied for the debt relief program, should expect to remain in interest-free forbearance for at least six more months pending the outcome of legal challenges to the SAVE plan according to the agency.
President Joe Biden made helping people saddled with student debt a key plank of 2020 campaign. But his efforts have been stymied by opposition, chiefly from lawmakers in Republican-led states. In 2023, Supreme Court ruled 6-3 against Biden’s plan to erase the student debt of more than 40 million people.
The U.S. Court of Appeals for the 8th Circuit in June temporarily blocked SAVE, barring the Biden administration from implementing elements of the plan that were not already being challenged by two lower court rulings.
Ahead of the legal sparring, the Education Department had forgiven total $5.5 billion in student debt for 414,000 under the SAVE plan.
The outcome of the November presidential election could determine whether such programs survive, experts say. The next administration would have the option of defending or ending the government‘s loan relief efforts, with Vice President and Democratic nominee Kamala Harris vowing to reduce student debt.
Critics of the moves to forgive student debt include Republican nominee and former President Donald Trump. While in the White House, Trump’s 2020 budget proposal called for eliminating the loan forgiveness program for public employees.
Mr. Biden late last week said an additional $4.5 billion in student debt was being canceled for about 60,000 teachers, nurses, firefighters and others, bringing to more than 1 million the number of public service workers to get debt relief during his administration.
