Just days after President Biden forgave $4.5 billion in student debt for 60,000 public service workers – and 2 weeks before the election, he is now extending a 6-month repayment freeze for 8 million borrowers that had enrolled in the administration's massive Saving on a Valuable Education (SAVE) plan, now on hold due to court challenges.
Under the extension, borrowers will not have to pay back their student loans, pending the outcome of legal challenges against the debt cancellation plan. SAVE enrollees will be placed in an interest-free general forbearance, according to the Department of Education. Borrowers, and employers on borrowers' behalf, can make a payment during this forbearance.
The $475 billion SAVE program remains on hold, after a federal judge in Missouri blocked the plan in October, just one day after a judge in Georgia gave approval to go forward. Previously, the Supreme Court denied a request from Pres. Biden to bypass lawsuit challenges that were making their way through the courts.
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GOP-led states have argued that the SAVE plan, which the administration had wanted to start implementing this fall ahead of the presidential election, is illegal. Republicans have argued that the program far exceeds the administration's legal authority and that President Biden was overstepping his executive action: "President Biden does not have the authority to erase student debt without express congressional approval," said a spokesperson for Missouri Attorney General Andrew Bailey.
For now, the Biden administration is unable to cancel any more federal student debt under the SAVE plan and is prevented from adding more provisions to the plan, until lawsuits are resolved.
Before the legal sparring, the Education Department had forgiven $5.5 billion in student debt for 414,000 borrowers under the SAVE plan, which was unveiled last August after an earlier debt cancellation effort – costing taxpayers $430 billion – was struck down by the Supreme Court.
Related: Judge blocks Biden's new student debt forgiveness plan, in another setback
Democratic Presidential candidate Kamala Harris will continue the efforts of Pres. Biden to "relieve the burden of student debt," she said in a White House statement, while Republican candidate Donald Trump has criticized the administration's push to forgive student debt.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
