US Appeals Court Blocks Biden Administration Student Loan Forgiveness Plan

From [HERE] A US federal appeals court on Thursday blocked President Joe Biden’s administration from implementing its student debt relief plan.

The Court of Appeals for the Eighth Circuit suspended the remaining portions of the Saving on a Valuable Education (SAVE) plan, which the Biden administration introduced last year to reduce monthly payments for student loan borrowers. 

Education Secretary Miguel Cardona stated, “Today’s ruling from the 8th Circuit blocking President Biden’s SAVE plan could have devastating consequences for millions of student loan borrowers crushed by unaffordable monthly payments if it remains in effect.”

Last month, two federal judges in Kansas and Missouri temporarily halted parts of the SAVE plan after several Republican lawmakers argued that the Education Department overstepped its authority and tried to continue forgiving student debt after the US Supreme Court blocked the Biden administration’s student loan forgiveness plan in June 2023. 

Attorney General of Missouri Andrew Bailey stated, “We can’t let Joe Biden saddle working Missouri families with Ivy League debt. That’s why we’ve got to keep pushing this suit forward. We’re excited to fight to protect from this illegal redistribution of wealth.” 

According to the Biden administration, the SAVE program raises the floor of discretionary income, decreases borrowers’ monthly payments and, for loans with original balances of $12,000 or less, limits a borrower’s repayment window to 10 years (from 20 or 25) of qualifying payments. SAVE is designed to approve more than $116 billion in targeted relief for 3.4 million student loan borrowers, including $39 billion for 804,000 borrowers through fixing historical inaccuracies in past payment count systems, $45.7 billion for 662,000 public servants, and $10.5 billion for 491,000 borrowers who have a total and permanent disability.

Solicitor General Elizabeth Preloger wrote in response to the recent court decisions: 

Many have already received bills that reflect the decrease in monthly payments to 5% of their discretionary income. Many would experience intense confusion when they are told that their payments must be recalculated and that they must be placed in forbearance—which would delay any eventual loan forgiveness.

Federal student loan repayments and interest have been on hold since March 2020, but they are set to restart on September 1. A December 2022 congressional report estimates that the US has approximately 43 million individual federal student loan borrowers. Collectively, those borrowers owe more than $1.6 trillion.