Student loan borrowers under the Saving for a Valuable Education (SAVE) plan didn't see much change after the Supreme Court maintained the block on the Department of Education's income-driven repayment plan. The initial block came as a result of an ongoing case dealing with the legality of the program. The Supreme Court's decision essentially leaves borrowers in a state of uncertainty as they were since the program came under legal scrutiny in July.
A statement from the Department of Education showed their disappointment with the decision, noting that lifting the injunction would have resulted in lower payments for borrowers around the country. The Department, however, remains committed to minimising the impact of this decision as they wait for the final ruling.
Many student loan advocates have criticised the legal wrangling as frantic and unfair. Mike Pierce, Executive Director of the Student Borrower Protection Center, expressed outrage, saying the ongoing debacle had left millions of student loan borrowers in an indeterminate state.
The SAVE Plan was introduced in July 2023 as a replacement for the REPAYE plan. Alike the former, SAVE was projected as an income-driven repayment plan with proposed 10% monthly repayment of borrowers' discretionary income, and loan balance forgiveness after 20 or 25 years for graduate school loans. The program differed in the calculation of discretionary income, which effectively meant lower payments for borrowers, accompanied by no increase in loan balances due to interest.
Notwithstanding, the program faced lawsuits since its early days, most notably from a group of Republican-led states who alleged that the Department of Education had no legal authority to implement the plan without the approval of Congress. The argument underlined the considerable cost the forgiveness would levy on the federal government.
Thus far, legal battles have primarily dealt with whether the plan can continue during the dispute. Due to this legal ping-pong creating confusion among the borrowers, the Department of Education has put all borrowers enrolled in the plan into forbearance.
An emergency appeal was lodged earlier the month by the Biden administration to the Supreme Court to lift the temporary prohibition on the plan during the case, an appeal the court declined. The case is proceeding in the appeals court while the block remains in force.