White House Pauses Student Loan Payments for 3M Borrowers

The Department of Education apparently he’s taking a break repayments to approximately 3 million student loan borrowers.

The pause comes as the White House defends its own new repayment plan against a wave of GOP-backed lawsuits, CNBC reported Sunday (June 30). Those registered Saving on the Valuable Education, or SAVE, plan, AND The Department of Education told the station that people with a monthly payment higher than $0 will have no debt for now.

The SAVE plan allows borrowers to pay just 5% of their discretionary income toward repayment student loans every month. People earning $32,800 or less have a $0 monthly payment. The program also accelerates the timeline by which many borrowers’ debts are completely forgiven.

But last week, federal judges in Kansas and Missouri temporarily halted major parts of SAVE after the group under Republican leadership states filed a lawsuit, arguing the White House exceeded his authority and attempt to find a way to cancel student debt after the Supreme Court ruling blocked the Biden administration’s efforts last year.

Despite the court ruling, the Department of Education continued to write off debts to borrowers, including another 160 thousand last month: SAVE plan members, public sector workers such as teachers and nurses, or borrowers who received relief because of the department’s amendments to the income-related debt repayment program.

Also in May, the government forgave $6.1 billion in loans graduates of Art Institutes, claiming that these people were misled by now closed for-profit chain art schools.

In April, the administration announced the plan which would result in debt relief for 30 million borrowers, a group that includes people who now owe more than when they began paying interest, borrowers who began repaying 20 or more years ago, students who attended schools that “did not follow accountability rules or failed to provide financially sound enrollees,” and borrowers who are facing financial hardship.

Debt relief efforts come amid heightened consumer pressure. As PYMNTS’ Karen Webster wrote in a recent column — referring to PYMNTS Intelligence research confirmed by government retail sales and sentiment statistics — “other consumer spending the shoe starts to fall”

Two-thirds of consumers say they are trading down, while just over half are consumers they switch to cheaper sellers. PYMNTS consistently reports that approximately 60% of U.S. households living from paycheck to paycheck.