3 million student loan borrowers won't owe a payment in July: Here's why
![3 million student loan borrowers won't owe a payment in July: Here's why](https://thehill.com/wp-content/uploads/sites/2/2023/10/GettyImages-888240130-e1697733882732.jpg?w=800)
(NEXSTAR) — Despite two federal injunctions handed down last week, millions of student loan borrowers will not have to make a payment on their debt in July.
The one-month forbearance is part of what was intended to be a new phase of benefits for borrowers enrolled in the Saving on a Valuable Education plan, otherwise known as the SAVE plan.
In July, early forgiveness and other benefits were set to take effect for many SAVE borrowers, including recalculating and/or reducing the payments owed by many. As part of that process, impacted borrowers were set to be placed in "a brief processing forbearance" through July. That means they would not have to make a monthly payment and their interest rates would temporarily drop to 0%.
But, when two federal judges handed down two injunctions related to the SAVE program last week, the forbearance appeared to be in jeopardy.
What are the injunctions?
In one ruling, a Kansas judge determined the Education Department cannot enact the full scope of the SAVE Plan because it did not receive authority from Congress. In the other, a Missouri judge ruled the department can’t forgive any loans under the SAVE Plan because it illegally deprives state loan operators of revenue — this ruling did, however, say monthly payments could be lowered.
The determinations do not impact the roughly 400,000 borrowers who have seen over $5.5 billion in debt forgiveness under the plan already. But, for now, the Biden administration cannot forgive any more debt for borrowers on the SAVE Plan, and cannot cut payments for borrowers as planned in July.
Will SAVE program borrowers still get forbearance?
While much of the SAVE program is now on hold, about 3 million enrolled borrowers with non-zero dollar payments will still be placed in forbearance for July.
Borrowers set to benefit from the forbearance will be notified by the Education Department in the coming days, if they haven't already.
It's unclear how many borrowers were originally on track to be placed into forbearance. A spokesperson for the Education Department previously told The New York Times the 4.6 million borrowers on the SAVE plan who have $0 monthly payments would not be placed into forbearance.
Following the injuctions, what else is the Education Department doing?
For now, the Education Department is not accepting any online applications to enroll in income-driven repayment programs or loan consolidation while it updates its systems to provide accurate information. The entire process is expected to take between four and six weeks.
Paper applications are, however, still being accepted for income-driven repayment programs and loan consolidation. While applications are reviewed, borrowers will be placed into a forbearance, if they have non-zero payments.
According to the Education Department, "many of the cost-savings provisions of the SAVE Plan remain in effect."
What happens next?
The orders are preliminary, meaning the injunctions imposed by the judges would remain in effect through a trial of the separate lawsuits. However, to issue a temporary order each judge had to conclude that the states were likely to prevail in a trial.
That also means it’s too soon to say what longer-term impact the injunctions will have on the SAVE Plan.
The White House said it strongly disagrees with the judges’ rulings and would continue to defend the program, and use every available tool to give relief to students and borrowers.
In a statement shared with Nexstar, an Education Department spokesperson echoed those sentiments:
“Republican elected officials continue to fight to block their own constituents from saving money, having their monthly payments cut in half, and receiving relief. President Biden, Vice President Harris, and Secretary Cardona remain committed to fixing a broken student loan system and making college more affordable for more Americans. They will not stop vigorously defending the SAVE Plan, the most affordable repayment plan in history, and will continue to fight for this long-overdue relief, no matter how many times Republican elected officials and their allies try to stop them.”
More than 8 million borrowers have enrolled in the SAVE Plan since it launched last summer.
The Associated Press contributed to this report.
Date: |
Filter
-
CNBC - Business
Millions of student loan borrowers to see their bills lowered in July — here's what else to know
The Biden administration's new repayment plan for student loan borrowers is facing legal challenges. Here's what relief borrowers can still expect. -
The Wall Street Journal - World
The S&P 500 Isn't as Diverse as It Used to Be. Here's Why That Matters.
As tech and financial stocks have come to dominate the index, volatility and interest-rate sensitivity have picked up. -
The Guardian - World
Should cuddling koalas be legal? Here’s why there’s a push to ban it in Queensland
Scores of famous faces have been snapped holding koalas in Australia over the years but the practice is falling out of favour. Follow our Australia news live blog for latest updatesGet our morning and afternoon news emails, free app or daily news ... -
CBS News - Top stories
More than 70 million people expected to travel for July 4th
AAA says 70.9 million people will be traveling at least 50 miles this week for the Fourth of July, with 60 million moving by car. CBS News Boston reporter Penny Kmitt has a look at the situation for flyers from Logan International Airport. -
CBS News - Top stories
From fireworks to food, here's how to save on Fourth of July expenses
According to the National Retail Federation, Americans are expected to spend $9.4 billion on food this Independence Day, with each consumer spending about $90. Here are a few tips to save money. -
MarketWatch - Business
Tesla’s stock is on a huge run. Here’s why one bear isn’t buying the ‘euphoria.’
Guggenheim is concerned that Tesla price cuts “pulled forward” demand, which could create challenges for the future. -
NBC News - Top stories
Fourth of July holiday will scorch with triple digit temps, over 100 million people under heat alerts
Heat warnings and watches are in place for 110 million people across 21 states for the holiday period, with dangerous and potentially historic extreme heat due for the West in the coming days and temperatures of 115 degrees possible. -
CBS Sports - Sports
MLB DFS: Top DraftKings, FanDuel daily Fantasy baseball picks, lineups, advice, stacks for July 3, 2024
SportsLine's Mike McClure, a daily Fantasy pro with more than $2 million in winnings, gives optimal MLB DFS lineup advice for WednesdayMLB -
MarketWatch - Business
This July 4, here’s how much money you need to declare ‘financial independence’
About 160 million of us are still working for The Man. -
CBS News - Top stories
Why you should open a long-term CD before the July inflation report
With the next inflation report slated to be released soon, savers may want to open a long-term CD now. Here's why.
More from The Hill
-
The Hill - Politics
Federal judge issues narrow pause on FTC noncompete ban
A federal judge on Wednesday granted a preliminary injunction on a nationwide ban on noncompete agreements issued this spring, calling into question its future in the face of opposition by prominent business groups. The Dallas-based tax firm Ryan ... -
The Hill - Politics
Gas export projects in limbo
Welcome to The Hill's Energy & Environment newsletter {beacon} Energy & Environment Energy & Environment The Big Story Gas export projects in limbo despite court ruling New gas export projects will likely remain in limbo for many months despite ... -
The Hill - Politics
Clyburn expects ‘mini primary’ for Democrats if Biden withdraws
Rep. Jim Clyburn (D-S.C.) said he would support the idea of a “mini primary” for the Democratic Party to choose a new candidate if President Biden decides to suspend his campaign amid growing concern from voters. Clyburn joined CNN’s Erica Hill on ...Joe Biden -
The Hill - Politics
Judge blocks Biden administration's new transgender health protections
A federal judge on Wednesday temporarily blocked enforcement of a new Biden administration rule bolstering health care protections for LGBTQ people, handing a preliminary legal victory to more than a dozen Republican-led states that challenged it ...Joe Biden -
The Hill - Politics
Biden in fundraising pitch: 'No one is pushing me out'
President Biden said nobody “is pushing” him “out” in a fundraising email sent Wednesday as his campaign faces headwinds following a bad performance versus former President Trump in a debate last week. “I'm the Democratic Party’s nominee,” the ...Joe Biden