The Harris-Biden administration extended a moratorium Monday on federal student loan repayments pending the outcome of legal challenges against the debt cancelation plan.
Roughly 8 million borrowers enrolled in the administration’s Saving on a Valuable Education [SAVE] plan will be excused from making monthly payments for at least another six months under the extension, which was first reported by CNBC.
President Biden’s $475 billion loan forgiveness push was temporarily blocked by the St. Louis-based 8th US Circuit Court of Appeals in July — following an earlier ruling by federal judges in Kansas and Missouri — amid a lawsuit filed by seven Republican-led states.
The Harris-Biden administration had already canceled $5.5 billion in student loan debt before the preliminary injunctions.
The SAVE plan was unveiled last August after an earlier debt cancellation effort – costing taxpayers up to $430 billion – was struck down by the Supreme Court.
Critics of the administration’s latest student loan gambit, including congressional Republicans, have described the plan as a brazen attempt to “buy votes” in an election year.
The repayment pause comes days after Biden canceled another $4.5 billion in student loans for public workers.
“For too long, the government failed to live up to its commitments,” Biden said in a statement last Thursday. “We vowed to fix that, and because of actions from our administration, now over 1 million public service workers have gotten the relief they are entitled to under the law.”
An Education Department spokesperson told CNBC that SAVE enrollees not making payments will be placed in an interest-free general forbearance as part of the payment freeze extension.
SAVE plan borrowers initially had their payments paused in July.