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A federal appeals court has ruled that a major part of President Biden’s student loan forgiveness plan can proceed after a prior injunction halted the initiative.

The injunction on the Saving on a Valuable Education (SAVE) repayment plan initially prevented the administration from reducing monthly payments or forgiving certain student debts. However, the 10th Circuit U.S. Court of Appeals recently lifted the injunction on the provision that lowers monthly payments, allowing them to decrease from 10% to 5% of discretionary income starting this month.

To mitigate the impact of the legal uncertainties, the administration has placed some borrowers in forbearance. Natalia Abrams, president of the Student Debt Crisis Center, expressed mixed feelings, saying, “While we are frustrated by the continued legal challenges brought to limit borrower relief, we are pleased to see the Department of Education take quick and decisive action by placing 3 million borrowers in an administrative forbearance.”

Since its implementation in the fall, approximately 8 million Americans have enrolled in the SAVE plan, part of President Biden’s broader strategy to alleviate student loan burdens. In October, the plan also raised the amount of income protected from repayment, increasing it from 150% to 225% above the federal poverty guidelines. The plan also ensures that borrowers who regularly pay their principal balances will not be penalized by accumulating unpaid interest.


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