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TAKEAWAYS KEY
- More than two million borrowers enrolled into the Saving for a Valuable Education Plan (SAVE) live in states which are fighting against the program.
- SAVE has been involved in two important lawsuits with Republican led states. Millions of borrowers have been forced to take a forbearance due to the uncertainty.
- Borrowers are worried that SAVE plans will disappear completely once a new administration is in place.
If you have student loans and live in one of these states, you may be among millions of borrowers whose state government may be responsible for all the uncertainty around the Saving for a Valuable Education (SAVE) plan.
More than a third or 2.4 million federal student loan borrowers enrolled in the SAVE plan live in one of the 18 states suing to block the income-driven repayment plan. The lawsuits created uncertainty for 6.9 million federal student loan borrowers who were enrolled in this plan.
This is according to the Student Borrower Protection Center’s (SBPC) recent report. The SBPC analyzed the data of the Department of Education as well the Census Bureau and New York Fed. The data was compiled before the White House’s most recent round of relief, which discharged $4.23 billion for 150,000 borrowers on Monday.
What brought us here?
Since July, borrowers enrolled in SAVE have been in an uncertain state. Kansas and Missouri filed two initial lawsuits that blocked the efforts of President Joe Biden to provide cheaper payments and easier forgiving to federal loan borrowers.
The Department of Education had to forbear from collecting the loans until the case was resolved.
Many of the lenders are concerned that Trump’s administration may abandon their plan completely in court, and they won’t receive the generous payment or forgiveness Biden promised.
Kansas Case
Kansas led a coalition of eleven states that filed a suit to stop the SAVE program from allowing for widespread forgiveness. The states claim that the president doesn't have the authority to authorize that much of an expenditure without congressional approval.
Kansas was removed from the case by a judge who said that it had no legal standing. Kansas currently has 60 000 borrowers in its SAVE program.
Alaska is leading the lawsuit, as it has more than 11,000 SAVE Plan borrowers. Texas, South Carolina and other states are also involved.
Missouri Case
Missouri is still the leader in this lawsuit, and has more than six states behind it. The district court ruled that Missouri had standing due to the "irreparable harm" the SAVE plan would have on Missouri's state-affiliated loan servicer, MOHELA.
The other six states—Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma—proved they have standing and are still involved in the lawsuits. These states were found to have a valid claim, that the loan forgiveness law does not allow it.
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