![Federal courts have halted the SAVE plan for now: ‘Things are getting much, much worse,’ advocates say](https://media.nbcnewyork.com/2024/08/108020537-1723663838640-gettyimages-1325267983-gus04034.jpeg?quality=85&strip=all&resize=320%2C180)
Borrowers who got a glimpse of lower student loan payments on the Saving on a Valuable Education income-driven repayment plan ran into another roadblock late last week.
On Aug. 9, The 8th Circuit Court of Appeals officially blocked President Joe Biden's administration from moving forward with lowering monthly payments and forgiving debt for long-term borrowers under the SAVE plan. The court's preliminary injunction cemented an earlier, temporary stay on the program that came down in July.
"A preliminary injunction is supposed to be quite an extraordinary measure to put in place a pause so that while litigation happens, things don't get worse," Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center, tells CNBC Make It.
"But, in fact, things are getting much, much worse for borrowers through all of this chaos and confusion."
The confusion is possibly the most challenging part. Some borrowers enrolled in the plan, but had to be put in forbearance in July so the Department of Education could accurately calculate further lowered monthly payments. Then the legal challenges, which include two multi-state lawsuits, sent the plan into a tailspin for borrowers and loan servicers alike.
As of now, borrowers on the SAVE plan have been placed in an interest-free forbearance while ED says it will continue to fight the legal challenges. It's unclear how long that forbearance will last.
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Brittany Rogers, a mental health professional based in Chicago, says she finally found a payment plan that was affordable and worked for her with SAVE.
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"It's extremely frustrating for them to snatch it away," she tells CNBC Make It. Her monthly payment had dropped by about $200 on the SAVE plan before she was notified of the legal battles and placed in forbearance.
"To have that [payment] solidified, and then two months later, it's like, 'Oh, actually, no, we're not doing that.' Where do we go from here?" she says.
'Unambiguously worse for all involved'
The Biden Administration has asked the Supreme Court to step in to lift the injunction and allow the SAVE plan to move forward.
"The Eighth Circuit's injunction has severely harmed millions of borrowers and the Department by blocking long-planned changes and creating widespread confusion and uncertainty," Elizabeth Prelogar, solicitor general for the U.S. Department of Justice, wrote in the filing.
"The injunction has forced the Department to place the affected borrowers into temporary forbearance — a result that is unambiguously worse for all involved."
Yu agrees that the injunction doesn't seem to serve the purpose of immediately forcing borrowers back into other payment plans, as the suing states may have hoped, and doesn't really allow the Department of Education to make alternate plans.
"There is kind of a legal void about what it would mean for these borrowers for whom the Department of Education has made a promise of this payment amount and this payment term, and the department can't deliver it," she says.
"From the borrower's perspective, this legal back and forth is just incredibly harmful, and I think that that is one of the pieces that the courts have really failed to take into consideration," she adds.
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