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Lawsuits

This page is a clearinghouse for ongoing litigation that may affect eligibility for different cancellation programs. We will continue to update this page as developments arise. This page was last updated on 9/30/2024 at 12PM ET.

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SAVE Lawsuits

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  • In the last few months, 18 state attorneys general have filed two partisan lawsuits, one led by Kansas and the other by Missouri, to block the Biden Administration and U.S. Department of Education from providing a new income-driven repayment plan, the SAVE plan, which offers a lower monthly payment while providing millions of student loan borrowers and public service workers a path towards student debt relief. Read our blog on the lawsuits here.

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  • On June 24th, two federal judges issued preliminary injunctions blocking critical pieces of the SAVE plan. The first blocked the shortened timeline to cancellation for borrowers with lower loan balances. The second blocked several provisions, including the piece that would have cut monthly payments in half this July for borrowers with only undergraduate loans.

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  • On June 30th, the second injunction was stayed while the federal government appeals the case. This means that the changes set to take effect on July 1st were implemented. 

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  • On July 18th, an Eighth Circuit’s court of appeals judge blocked the SAVE plan until the appeal of the injunction is resolved. Read more here.

 

  • On August 9th, the Eighth Circuit issued a decision blocking the SAVE plan pending the appeal of the injunction. This means that, for now, there will be no cancellation, no lower payments, and no waiver of interest under the SAVE plan. Borrowers who were enrolled in SAVE will still remain in a non-interest-bearing administrative forbearance, and borrowers who apply for SAVE will be placed on one following the submission of their application. Borrowers can enroll in the other IDR plans but currently the only way to apply for IDR plans is through a paper application. This forbearance time does not count toward PSLF cancellation nor IDR cancellation.
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  • The other preliminary injunction still in effect means that borrowers expecting early cancellation of their student loans after 10-19 years in repayment are unable to receive it under SAVE at this time. Anyone who has already had their debt cancelled under SAVE will not have their debt reinstated.

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  • These injunctions are NOT a determination by a judge as to whether SAVE is legal. They are simply a decision about whether or not allow SAVE to be implemented while the courts decide if the plan is legal.

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  • Read more about considerations related to the SAVE lawsuits here.

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Plan B Lawsuit

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On September 3, 2024, seven states, led by Missouri Attorney General (AG) Andrew Bailey, sued to block the Biden-Harris Administration’s “Plan B” student loan debt relief plan in a Georgia district court. The lawsuit is unprecedented and alarming in that it calls for a federal judge to block a rule that is not yet final or in effect. Currently, the rule is blocked from being implemented. 

 

Plan B

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The Administration’s Plan B proposal is expected to provide debt relief for over 30 million borrowers in specific circumstances, including: 

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  • Borrowers eligible for debt relief under an Income-Driven Repayment plan, Public Service Loan Forgiveness, or other relief programs but who are not enrolled; 

  • Borrowers crushed by runaway interest; 

  • Borrowers who’ve been stuck in repayment for over 20 years; and 

  • Borrowers who have attended low-value programs or schools.

 

The “Plan B” rule was proposed by the U.S. Department of Education (ED) in April 2024 and is not yet final or in effect. The Administration conducted a notice and comment process as required by the Administrative Procedures Act and has been in the process of finalizing the rule over the last several weeks. The lawsuit argues that these states could face financial harm in lost tax revenue and that MOHELA, a student loan servicer that once had a financial relationship with the state of Missouri, may lose potential revenue generated by servicing student loans if these borrowers were to receive student debt relief.

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