Student loan cancellation: payment break extended by 6 months for 8 million borrowers

Payments on some student loans will remain suspended for at least the next six months, according to the U.S. Department of Education.

The pause covers some 8 million borrowers under the federal Saving on a Valuable Education, or SAVE, plan. CNBC, which was first to report the development, said the forbearance comes as the Biden administration continues to wage legal battles over broader student loan relief efforts.

Current SAVE plan enrollees will have their monthly payments waived and their existing balances will not accrue interest, according to reports.

Earlier this year, a federal court issued an injunction stopping implementation of part of the SAVE plan, which calculates payments based on a borrower’s income and family size rather than their balance. loans and cancels the debt after a certain number of years. In its 2022 announcement, the White House said it would cut many borrowers’ monthly payments to zero and save others about $1,000 a year.

A group of Republican-led states sued in March to block the plan, saying it was a workaround to Biden’s first attempt at student loan forgiveness that the Supreme Court ruled against. rejected last year.

The administration is pursuing other debt relief programs. Last week, Biden announced that an additional $4.5 billion in student debt had been canceled for 60,000 firefighters, teachers, social workers and nurses who are part of the Public Service Loan Forgiveness program, or PSLF. This program provided debt relief for more than one million borrowers by $74 billion.

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