The 8 million in student loans in Biden’s new repayment plan just got more bad news after a federal court formally blocked lower payments and debt cancellation

Victor Boolen

The 8 million in student loans in Biden’s new repayment plan just got more bad news after a federal court formally blocked lower payments and debt cancellation

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  • The 8th Circuit formally blocked the SAVE student loan repayment plan in its entirety.

  • It replaces a temporary stay in the plan starting in July, which suspended cheaper payments and debt relief.

  • Enrolled borrowers are likely to be in limbo for a long time as the legal process progresses.

The legal roller coaster among millions of student loan borrowers continues.

On Friday, the 8th Circuit Court of Appeals issued a preliminary injunction against President Joe Biden’s SAVE income-based repayment plan, which was designed to lower monthly payments and shorten relief for 8 million borrowers.

If this sounds familiar, that’s because it is: On July 18, the 8th Circuit imposed a temporary stay on the plan in response to a lawsuit led by the Missouri attorney general to block the plan from going ahead. This latest ruling supersedes that stay, and likely means borrowers will be in limbo for longer while the legal process plays out.

“This takes into account, among other things, that all borrowers currently affected by our administrative stay are in administrative forbearance, so they are not required to pay their loan principal or interest, borrowers remaining on PAYE and REPAYE plans are not affected, and states cannot turn The 8th Circuit stated in its decision.

The Department of Education did not immediately respond to Business Insider’s request for comment on what this latest decision means for borrowers. As a result of legal challenges, the department has already done so placed all borrowers in administrative forbearanceduring which borrowers do not have to make payments and no interest accrues.

Additionally, while the department confirmed that this forbearance does not count toward progress toward public service loan forgiveness or income-based repayment for borrowers, it recently released guidance on other ways borrowers can still get credit, including transitioning to a new repayment plan.

SAVE’s legal challenges have continued for months. Earlier this year, two separate groups of GOP state attorneys general filed lawsuits to block parts of the plan, leading two federal courts to issue preliminary injunctions on cheaper payments and debt relief. The 10th Circuit later granted Biden’s request to stay one of the decisions, but the 8th Circuit ultimately halted the plan’s implementation in its entirety.

The back-and-forth has caused confusion and stress among many borrowers, who are unsure what their finances will look like if SAVE is blocked. A SAVE borrower previously told BI that she is worried she will have to sell her house or get another job if she no longer has the option of getting lower payments under the plan.

“Just when my wife and I felt like we could start a family and start the next chapter of our lives, it feels like the rug was pulled out from under us because it looked like the SAVE plan was something we could count on,” he said .

Are you enrolled in the SAVE program? Share your story with this reporter at asheffey@businessinsider.com.

Read the original article on Business Insider

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