Student Loan Borrowers Blocked from Affordable Repayment Plans
Published On Feb 28, 2025, 3:03 PM
The U.S. Education Department has temporarily suspended applications for income-driven repayment plans for federal student loan borrowers. This decision follows a federal appeals court ruling that upheld a temporary suspension of the Saving on a Valuable Education (SAVE) plan, which was part of the Biden administration's efforts to make student loan payments more manageable. As applications have been closed for other older income-driven plans not initially entangled in litigation, borrowers are left without access to more affordable payment options, significantly affecting those in financial distress.
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With the ongoing legal issues surrounding the SAVE plan and the subsequent suspension of applications for income-driven repayment plans, there may be a rise in default rates among student loan borrowers unable to manage their payments. This could negatively affect companies in related sectors, such as banking institutions and financial services that have exposure to student loans.
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