US President Joe Biden speaks about the economy in Westby, Wisconsin, on September 5, 2024. Several … [+] Biden student loan forgiveness and relief initiatives face uncertain futures as legal challenges continue. (Photo by ANDREW CABALLERO-REYNOLDS / AFP) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)
At least eight million borrowers are currently in a forbearance, and millions more face uncertainty about student loan forgiveness eligibility. This unprecedented turmoil in the student loan system is a result of multiple legal challenges over President Joe Biden’s debt relief initiatives and sweeping court orders that have suspended several programs. And an updated court briefing schedule suggests that borrowers could be stuck in limbo well into 2025.
The Biden administration is facing legal battles on multiple fronts, all brought by Republican-led states seeking to block or overturn student loan relief efforts. The SAVE plan, a new income-driven repayment program designed to reduce payments, curtail runaway interest, and provide pathways to student loan forgiveness, has been halted through a nationwide injunction. Student loan forgiveness under IDR plans may also now be at risk as courts examine the intent of legislation Congress passed more than 30 years ago. And a separate, upcoming debt relief program the administration had hoped to begin implementing this fall has now been stopped by another federal court.
Here’s the latest on what’s going on, and what borrowers should expect as these challenges continue.
SAVE Plan Forbearance And Loan Forgiveness Pause Could Last Until Summer Of 2025
The 8th Circuit Court of Appeals issued a nationwide injunction blocking the SAVE plan in August, and as a result, at least eight million borrowers who enrolled in the program have now been placed into a forbearance. Additional borrowers who apply for the SAVE plan will also be put into a forbearance, according to updated Education Department guidance.
During the forbearance, no payments are due, and no interest will accrue. But the period won’t count toward student loan forgiveness under IDR plans or Public Service Loan Forgiveness. This effectively pauses the clock for many borrowers who are pursuing debt relief.
After the Supreme Court refused to modify or reverse the injunction last month, the case is back with the 8th Circuit, which will now consider at least some of the underlying legal arguments of the Republican-led challenge (not just whether to temporarily halt the program while the lawsuit proceeds). The court issued a briefing schedule last week, and set a hearing date for October 24. The court will issue a decision sometime after that.
Whatever the ruling is, it will likely get appealed again to the Supreme Court. If the Supreme Court moves quickly, it could release a final decision in the summer of 2025 (likely June at the earliest). Assuming borrowers remain in the SAVE plan forbearance until then, that could mean up to around a year of no payments, no interest, and no student loan forgiveness credit. And that’s if both the 8th Circuit and the Supreme Court move quickly enough to issue a final ruling by then — it could take even longer, however.
Student Loan Forgiveness For SAVE Plan And IDR Remains In Limbo For Now
The nationwide injunction issued by the 8th Circuit halts all student loan forgiveness under the SAVE plan. But the Biden administration argues that the injunction goes far beyond that.
The 8th Circuit suggested in its August order that it’s not just student loan forgiveness under the SAVE plan that’s blocked for now — it’s student loan forgiveness for any borrower enrolled in the SAVE plan, potentially including loan forgiveness under other programs that are not being challenged, such as PSLF. The Biden administration asked the court to clarify its position, but the court declined, and the Supreme Court opted not to intervene at this juncture.
In addition, the 8th Circuit suggested that student loan forgiveness under other IDR plans derived from the same statutory authority — including the ICR, PAYE, and REPAYE plans — may also be in jeopardy.
The outcome of the upcoming legal briefing and oral arguments will determine the scope of the block on student loan forgiveness. But in the meantime, millions of borrowers will not know where they stand on loan forgiveness for quite some time, even if they are seeking relief under other programs that are not directly being challenged through the SAVE plan litigation.
New Biden Student Loan Forgiveness Initiative Also Blocked For Now
Separately, a different federal court blocked yet another student loan forgiveness initiative last week.
The Biden administration was preparing to launch a new program this fall that could have provided debt relief to 30 million borrowers who first entered repayment 20 or 25 years ago, experienced runaway interest accrual, or attended low-value schools. But before the rules had even been finalized, Republican-led states (including many of the same states that sued the administration to block the SAVE plan) launched a preemptive lawsuit, arguing that the Education Department was preparing to implement loan forgiveness before the final regulations were even published.
Last week, a Georgia federal court blocked that program, and ordered the administration to not implement any debt relief (even though the new program technically does not even exist yet). This is a temporary order, and the court will consider whether to modify or maintain the order after it considers further legal arguments. Briefing is due to be completed this week. But whatever final decision the Georgia court makes will almost certainly be appealed, as well — ensuring that student loan forgiveness under Biden’s new program will similarly be stuck in limbo, possibly for a year or longer.
Upcoming Elections Could Change Timelines For SAVE Plan And Student Loan Forgiveness Outcomes
While the courts will move at their own pace, there is one wildcard in the timeline for the legal challenges over the SAVE plan and student loan forgiveness: the upcoming elections in November.
Whether former President Donald Trump or Vice President Kamala Harris wins the presidency could determine the fate of these programs. Trump has expressed hostility toward Biden’s student debt relief efforts, and could take steps to undermine or overturn these new programs. Meanwhile, Harris — who, as the California Attorney General, took steps to protect student loan borrowers defrauded by their schools — has promised to continue implementing debt relief.
The makeup of Congress following the elections will also be critical. One-party control of the White House, Senate, and House of Representatives could lead to sweeping changes one way or another — ranging from the complete elimination of loan forgiveness under IDR and PSLF as suggested by Project 2025, to the codification in statute of the current Biden programs (which would likely insulate them from the pending challenges). Divided government could yield compromise — or continued gridlock.
