Student loan forgiveness: Payment pause extended for 6 months for 8 million borrowers

Payments for some student loans will remain on pause for at least the next six months, according to the U.S. Department of Education.

The pause covers some 8 million borrowers under the federal Saving on a Valuable Education, or SAVE, plan. CNBC, which first reported the development, said the forbearance comes as the Biden administration continues to fight legal battles over broader student loan relief efforts.

Current enrollees in the SAVE plan will be excused from their monthly payments and their existing balances won’t accumulate interest, according to the reports.

Earlier this year, a federal court issued an injunction stopping the implementation of part of the SAVE plan, which calculates payments based on the borrower’s income and family size as opposed to their loan balances and forgives debt after a certain number of years. When it was announced in 2022, the White House said it would cut many borrowers’ monthly payments to zero and would save others around $1,000 a year.

A group of Republican-led states filed suit in March to block the plan saying it was a workaround Biden’s first attempt at student loan cancellation which the Supreme Court rejected last year.

The administration continues other debt relief programs. Last week, Biden announced an additional $4.5 billion in student debt was canceled for 60,000 firefighters, teachers, social workers and nurses who are part of the Public Service Loan Forgiveness, or PSLF, program. That program has accounted for $74 billion in debt relief for more than 1 million borrowers.