The Harris-Biden administration on Monday extended a moratorium on federal student loan payments pending the outcome of legal challenges to the debt forgiveness plan.
About 8 million borrowers enrolled in the administration’s Savings on Value Education (SAVE) plan will be exempt from making monthly payments for at least six more months under the extension, which was reported for the first time by CNBC.
President Biden’s $475 billion loan forgiveness request was temporarily blocked by the St. Louis-based 8th U.S. Circuit Court of Appeals in July — following an earlier ruling by federal judges in Kansas and Missouri – in the midst of a lawsuit filed by seven Republican-led states.
The Harris-Biden administration had already canceled $5.5 billion in student debt before the preliminary injunctions.
The SAVE plan was unveiled last August after a previous debt forgiveness effort — costing taxpayers up to $430 billion — was struck down by the Supreme Court.
Critics of the administration’s latest student loan strategy, including congressional Republicans, have described the plan as a brazen attempt to “buy votes” in an election year.
The repayment pause comes days after Biden canceled an additional $4.5 billion in student loans for public workers.
“For too long, the government has failed to deliver on its commitments,” Biden said in a statement last Thursday. “We promised to fix this problem, and thanks to the actions of our administration, more than a million public employees have now received the relief to which they are entitled under the law. »
A Department of Education spokesperson told CNBC that SAVE enrollees who do not make payments will be placed in a general interest-free forbearance as part of the payment freeze extension.
SAVE plan borrowers initially had their payments suspended in July.