The Biden administration is pausing student loan payments for about three million borrowers who are enrolled in its new repayment plan as it defends the program in court against Republican-backed lawsuits.
Those who have signed up for The Saving on a Valuable Education, or SAVE plan, and have a monthly payment above $0 will not owe anything on their debt for the time being, the U.S. Department of Education told CNBC.
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Earlier this week, two federal judges in Kansas and Missouri temporarily halted significant parts of President Joe Biden’s SAVE plan.
The preliminary injunctions are a result of lawsuits filed earlier this year by Republican-led states, including Florida, Arkansas and Missouri. The states argued that the Biden administration was overstepping its authority and trying to find a roundabout way to forgive student debt after the Supreme Court blocked its sweeping plan last year.
Under the SAVE plan, many borrowers pay just 5% of their discretionary income toward their debt each month, and its guidelines state anyone making $32,800 or less has a $0 monthly payment. It also expedited the timeline after which many borrowers receive the full cancellation of their debt.
The U.S. Department of Justice has filed a request to stay the injunction in Kansas.
“Republican elected officials continue to fight to block their own constituents from saving money, having their monthly payments cut in half, and receiving relief,” an Education Department spokesperson said in a statement.
They added that the Biden administration “will not stop vigorously defending the SAVE Plan, the most affordable repayment plan in history.”
The Department of Education will reach out to affected borrowers in the coming days. Those borrowers will have their loans put into forbearance and will not accrue interest.
The 4.5 million borrowers who have a $0 monthly payment under SAVE will continue to owe nothing and be considered up to date with their payments, the Department of Education said.