Student loan borrowers can still rely on some relief, at least temporarily, amid ongoing legal challenges.

• The Biden administration's student loan repayment plan and debt cancellation package are facing legal challenges.
• Despite the stressful news for borrowers, there is still something they can rely on for relief.

The Biden administration's attempts at student loan forgiveness have faced legal challenges, with the Supreme Court striking down President Joe Biden's first attempt at wide-scale forgiveness last summer.

The SAVE plan, a new income-driven repayment plan for student loans, has been partially suspended due to lawsuits filed by Republican-led states, including Arkansas, Florida, and Missouri. Experts predict that Biden's attempt to deliver sweeping debt forgiveness will likely face similar opposition.

Despite the stressful news, student loan borrowers can still rely on this certainty for the time being.

Most of SAVE plan is still in effect

The Biden administration introduced the SAVE plan in the summer of 2023, claiming it to be the most affordable student loan plan ever. The new income-driven repayment plan's terms are the most generous yet, sparking controversy among critics of debt forgiveness. Approximately 8 million borrowers have enrolled in SAVE, as per the White House.

The SAVE plan offers lower monthly payments than any other IDR plan and leads to quicker debt erasure for those with small balances. Some individuals can have their debt cleared after just 10 years, while other IDR plans typically only provide relief after 20 or 25 years.

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In June 2023, two federal judges in Kansas and Missouri temporarily halted significant parts of SAVE, following the argument of several red states that the Education Department exceeded its authority and attempted to indirectly forgive student debt after the Supreme Court blocked its comprehensive plan in June 2023.

The Biden administration successfully appealed one of the injunctions against SAVE, allowing most of the program to remain in effect for the time being.

The reduction of monthly bills to 5% of discretionary income and the government's coverage of any unpaid interest each month for SAVE enrollees will benefit many borrowers who enrolled in the program.

The SAVE plan still offers significant benefits to borrowers, such as reduced undergraduate loan payments by half and protection against interest accumulation while making monthly payments, according to U.S. Department of Education Secretary Miguel Cardona.

Due to the ongoing prohibition against SAVE for expedited loan forgiveness, borrowers are unable to have their loans dismissed under the plan's accelerated schedule.

The SAVE plan has caused legal whiplash for student loan borrowers, making it difficult for them to budget, according to Aissa Canchola-Bañez, policy director at the Student Borrower Protection Center.

"Borrowers should not be expected to live in court judgment by court judgment," Canchola-Bañez stated. "They deserve relief, and it is crucial for the administration to finalize its debt relief rules and provide debt relief to as many borrowers as possible."

Sweeping loan forgiveness will face lawsuits, too

The Biden administration is expediting its efforts to finalize its revised loan forgiveness plan, which is a more targeted relief package that could benefit millions of Americans.

The Department of Education in the U.S. will reveal its final rule on its debt relief plan in October, and there is a possibility that it may begin forgiving debts that month.

Those who will gain from the relief are borrowers whose balances have increased beyond their initial loans and those who have been paying off their debts for a long time.

Mark Kantrowitz, a higher education expert, stated that lawsuits are likely to be filed soon after the Education Department's decision.

Kantrowitz stated that a recent Supreme Court ruling could increase the likelihood of legal attacks against Biden's revised plan.

In June, the high court overturned the 40-year-old Chevron doctrine, which required judges to defer to federal agencies' interpretations of laws. The 6-3 ruling, which divided the conservative-majority court along ideological lines, is expected to weaken the federal government's regulatory power.

But there is some good news for borrowers, Kantrowitz said.

He stated that the SAVE repayment plan is not in danger, as Congress granted the U.S. Department of Education the power to modify loan repayment plan terms for students.

The Education Department's other income-driven repayment plans and the Public Service Loan Forgiveness program are not affected by the legal drama. Consumer advocates advise borrowers to investigate any relief options they may be eligible for.