Biden’s student debt relief plan faces a second halt right after proceeding — what does this mean for roughly 30 million borrowers in limbo?

Legal bumps for loan relief

The Biden Administration’s Saving on a Valuable Education (SAVE) plan, which was introduced in 2023 as an income driven repayment initiative aimed at reducing or eliminating monthly payments for students, faces its own legal pause, too.

Enrollment surged when the plan launched, but opposition from seven Republican-led states has temporarily stalled the initiative, arguing that the administration overstepped its authority by attempting to forgive loans without Congressional approval.

With 42.8 million Americans carrying federal student loan debt and an average balance per borrower of $37,853, according to the Education Data Initiative, the stakes are high.

An Education Department spokesperson expressed frustration over the most recent delay, accusing Republican officials of attempting to “prevent millions of their own constituents from getting breathing room on their student loans."

Kiss your credit card debt goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

Explore better rates

What does this mean for borrowers?

The stop and go nature of the student loan forgiveness plan has left borrowers in a frustrating cycle of uncertainty.

Now, they face a double setback. Not only has the relief plan been halted, but the 12-month grace period for student loan repayments ended on September 30. This grace period was intended to offer a buffer for borrowers struggling to keep up with payments, helping them avoid defaults that could hurt their credit scores.

“The end of the on-ramp period means the beginning of the potentially harsh consequences for student loan borrowers who are not able to make payments,” said Persis Yu, deputy executive director at the Student Borrower Protection Center in The Globe and Mail.

With both the on-ramp period ending and the SAVE plan on hold, borrowers have fewer options at their disposal. While this latest pause won’t immediately impact loan balances, ongoing litigation means that borrowers should continue making their student loan payments to avoid the risk of default.