Federal Government to Pause Student Loan Payments, Interest for 3 Million Borrowers

Federal Government to Pause Student Loan Payments, Interest for 3 Million Borrowers

In response to court rulings blocking key elements of the federal government’s new student loan repayment program, the Biden administration will be giving about 3 million borrowers a reprieve from their monthly payments, The Epoch Times reported. The 3 million borrowers eligible for the pause are enrolled in the income-driven repayment program dubbed SAVE and have a monthly payment that is more than zero, according to the U.S. Department of Education. About 4.5 million SAVE enrollees who qualify for zero-dollar payments because of low incomes will not be included in the pause. The payment pause is similar to the COVID-19 student loan relief that lasted for 3 1/2 years, from March 2020 through September 2023, during which borrowers didn’t have to pay monthly bills and interest didn’t accrue. Borrowers who are eligible for the new pause will be informed directly in the coming days. The announcement was made days after a federal judge in Kansas blocked the implementation of the final segment of the SAVE plan but declined to unwind the portions of it that are already in place. The blocked segment is a calculation formula update scheduled to take effect on July 1. It would have allowed borrowers with undergraduate loans to have their monthly payments capped at 5 percent of their discretionary income, down from the current 10 percent limit. (Subscription required to view article.)
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