The Supreme Court has declined to revive President Joe Biden's latest student loan debt relief plan, dealing a significant setback to the administration's efforts to reduce the financial burden on borrowers.
The court's decision, announced on Wednesday, leaves in place a nationwide injunction imposed by an appeals court, as reported by NBC News.
The Supreme Court's brief order denied an emergency request filed by the Biden administration, which sought to lift the injunction. This decision comes after the administration issued a regulation finalizing its Saving on a Valuable Education (SAVE) plan in July 2023, following a previous Supreme Court ruling that the administration lacked the authority to implement an earlier loan forgiveness program.
The SAVE plan, like its predecessor, faced legal challenges from multiple conservative-leaning states led by Missouri. These states argued that the plan, which aimed to cap undergraduate loan repayments at 5% of income, was not authorized by Congress. The states contended that the plan would require spending up to $475 billion and should be blocked using the "major questions" doctrine, which requires express authorization from Congress for sweeping new policies.
Missouri Attorney General Andrew Bailey praised the court's decision, stating:
This court order is a stark reminder to the Biden-Harris administration that Congress did not grant them the authority to saddle working Americans with $500 billion in someone else’s Ivy League debt. This is a huge win for every American who still believes in paying their own way.
In response, a spokesperson for the Education Department expressed disappointment but reaffirmed the administration's commitment to lowering repayment options for borrowers. The department will continue to work towards minimizing disruption as they await a final decision from the Eighth Circuit.
The SAVE plan included several provisions aimed at easing the financial burden on student loan borrowers. One key provision was the reduction of the repayment cap for undergraduate loans from 10% to 5% of income. Additionally, the plan sought to place limits on accrued interest and shorten the payment period for certain small loans, allowing them to be forgiven.
Approximately 8 million people are already enrolled in the SAVE plan, with other provisions previously in effect that have allowed for reduced repayment amounts. The plan has also faced challenges in other courts, with judges blocking parts of it. However, the Eighth Circuit's decision has made these cases less relevant.
The Supreme Court's order on Wednesday also rejected a separate application brought by a different group of states challenging the plan. This decision underscores the legal hurdles the Biden administration faces in implementing its student loan relief initiatives.
Despite the setback, the Biden administration remains committed to finding ways to ease the burden of student loan debt. The Education Department will continue to push for lower repayment options and other benefits for borrowers, even as they await further legal decisions.
The court order has put a temporary halt to the implementation of the SAVE plan, but the administration is determined to find alternative solutions. The Education Department will work to minimize disruption to borrowers and ensure that they receive the support they need during this period of legal uncertainty.
Solicitor General Elizabeth Prelogar argued in court papers that the changes to repayment amounts are allowed under a 1993 federal law. She noted that the appeals court injunction goes beyond the new plan and blocks implementation of previous changes to repayment terms dating back to 1994, disrupting the settled expectations of borrowers who have made payments for years or even decades.
The Supreme Court's refusal to revive President Biden's latest student loan debt relief plan marks a significant obstacle for the administration's efforts to provide financial relief to borrowers. The court's decision leaves in place an injunction imposed by an appeals court, halting the implementation of the Saving on a Valuable Education (SAVE) plan. Despite this setback, the Biden administration remains committed to finding ways to lower repayment options and support borrowers. The Education Department will continue to push for these initiatives as they await further legal decisions.
