Risks for student loan borrowers

The Biden administration rolled out a new repayment plan, called SAVE, or Savings for Education with Value, in the summer of 2023, describing it as “the most affordable student loan plan ever.” Under the program, many borrowers expect to see Their bills are cut in half or more..

However, Republican-backed states including Arkansas, Florida and Missouri filed a lawsuit against the SAVE plan earlier this year, putting the relief effort in jeopardy.

States Debate that the Biden administration has overstepped its authority with SAVE and is essentially trying to find a roundabout way to cancel student debt after The Supreme Court blocked his sweeping plan last year..

In response, two federal judges in Kansas and Missouri temporarily halted a key part of the SAVE plan on June 24. Days later, the Biden administration has successfully appealed a partial ban on its plans.. However, the fate of SAVE remains uncertain until a judge decides the cases.

Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, said borrowers likely won’t know more information until after the presidential election in November.

Buchanan believes the cases will eventually go to the Supreme Court.

“Then they themselves did not bring the issue up for discussion until the October session, leaving the decision much later,” he said.

SAVE subscribers can now learn more about what recent legal developments mean for them in a story from CNBC From last week.

In late June, the high court struck down the so-called Chevron doctrine, a 40-year-old precedent that requires judges to defer to a federal agency’s interpretation of disputed laws. Decision 6-3split the conservative majority court along ideological lines, expected to weaken federal authority regulatory power.

“Federal agencies will have less flexibility in developing, implementing and enforcing regulations,” said higher education expert Mark Kantrowitz.

That could make Biden reworked efforts to eliminate student debt more difficult, Kantrowitz explained. The president had hoped to begin forgiving borrowers’ debts under what is known as Plan B. before the election.

“President Biden’s student debt forgiveness proposal involves significant statutory interpretation,” Kantrowitz said. “That makes it more susceptible to legal challenge.”

Harris has helped push Biden’s policies to ease the burden on borrowersand is likely to continue her efforts, experts say. However, as a presidential candidate in the 2020 race, Harris has introduced a debt-forgiveness program that has been criticized as too complicated and narrow(To qualify, borrowers must receive a Pell Grant and open a business in a disadvantaged community, among other requirements.)

Ernesto Apreza, Harris’ press secretary, did not immediately respond to a request for comment.

Now, the reality is Trump is leading in the polls is a concern of consumer advocates.

As president, Trump has called for eliminating existing U.S. Department of Education loan relief programs, including the popular Public service loan forgiveness initiative. He also wants to cut the budget of this department and his administration. stop a rule aims to erase debt for people who were defrauded by schools.

“When Donald Trump was president, before the pandemic, a student loan borrower defaulted every 26 seconds, and more than 99% of educators, first responders, and nurses were denied the relief they were entitled to under PSLF,” said Aissa Canchola-Banez, political director at Protect Borrowers Action.

“Americans with student debt have never faced a debt crisis like this,” Canchola-Banez said.