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The 8th Circuit officially blocked the SAVE student loan repayment plan in its entirety.
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It replaces the temporary postponement of the July plan, which halted lower payments and debt restructuring.
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Registered borrowers are likely to remain in limbo for a long time as the legal process progresses.
The legal rollercoaster for millions of students with student debt continues.
On Friday, the 8th Circuit Court of Appeals granted a preliminary injunction against President Joe Biden’s income-based repayment plan SAVE, which is designed to lower monthly payments and shorten the forbearance period for the 8 million borrowers enrolled.
If this sounds familiar, that’s because it is: On July 18, the 8th Circuit issued a temporary injunction against the plan in response to a lawsuit filed by the Missouri attorney general to block the plan’s implementation. This latest ruling replaces that injunction, and it likely means that enrolled borrowers will remain in limbo for a longer period of time while the legal process plays out.
“Among the considerations here is that all borrowers currently affected by our administrative forbearance are under administrative forbearance and thus are not obligated to pay principal or interest on their loans, that borrowers who remained under the PAYE and REPAYE programs are not affected, and that states cannot turn back the clock on loans that have already been forgiven,” the 8th Circuit said in its ruling.
The Department of Education has not yet responded to a request for comment from Business Insider on how this latest ruling will affect borrowers. As a result of the legal challenges, the department has already all registered borrowers placed on administrative defermentwhere borrowers do not have to make payments and no interest is charged.
Additionally, the Department confirmed that this grace period will not count toward the forgiveness progression for borrowers on Public Service Loan Forgiveness or income-driven repayment. However, it recently published guidance on other ways borrowers can still obtain credit, including switching to a new repayment plan.
Legal challenges to SAVE have been brewing for months. Earlier this year, two separate groups of GOP attorneys general filed lawsuits seeking to block parts of the plan, leading two federal courts to issue preliminary injunctions on the cheaper payments and debt restructuring. The 10th Circuit later granted Biden’s request to stay one of the injunctions, but the 8th Circuit ultimately blocked the plan from going into full effect.
The back and forth has caused confusion and stress for many borrowers who are unsure what their finances will look like if SAVE is frozen. One borrower on SAVE previously told BI that he fears he will have to sell his home or get a second job if he loses access to cheaper payments under the plan.
“When my wife and I felt like we could start a family and start the next chapter in our lives, it felt like the ground had been pulled out from under us because it seemed like we could rely on the SAVE plan,” he said.
Are you registered with SAVE? Share your story with this reporter on asheffey@businessinsider.com.
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