Supreme Court Denies Biden’s Student Debt Relief Plan

By John Kruzel

WASHINGTON (Reuters) – The U.S. Supreme Court declined on Wednesday to revive President Joe Biden’s student debt relief plan, boosting Republican-led states that have sued to block it.

The justices rejected the administration’s request to temporarily lift a judicial decision that paused the plan, aimed at lowering monthly payments for millions of borrowers and expediting loan forgiveness for some.

Following the Supreme Court’s decision in June 2023 to block Biden’s prior plan to cancel hundreds of billions of dollars in debt, the administration aimed to continue providing relief to as many borrowers as possible.

In August 2023, the White House launched the Saving on a Valuable Education (SAVE) plan, branded as “the most affordable repayment plan ever created.” The plan would reduce monthly undergraduate loan payments from 10% to 5% of a borrower’s discretionary income, saving the typical borrower around $1,000 annually, as stated by the White House.

Other advantages of the SAVE plan include a pause on payments for borrowers earning less than $32,000 per year until their income exceeds that amount and debt forgiveness for some smaller loans in as few as 10 years, compared to the previous timelines of 20 or 25 years.

The administration expects the plan to cost taxpayers approximately $156 billion over 10 years, but Republican state attorneys general argue the actual cost could soar to around $475 billion. Some components began in February, while others were scheduled to start in July.

In April 2024, seven Republican-led states filed a lawsuit to block the program, contending that the Department of Education overstepped its legal authority in implementing the debt relief plan.

U.S. District Judge John Ross in St. Louis preliminarily blocked the administration from enacting parts of the SAVE plan related to loan forgiveness to specific borrowers.

A ruling from the Eighth Circuit Court of Appeals on Aug. 9 went further, halting the entire debt relief plan while the case was under review, prompting the administration’s emergency request to the Supreme Court.

U.S. Secretary of Education Miguel Cardona expressed strong disagreement with the Eighth Circuit’s ruling, stating it would compel millions of borrowers to pay significantly more each month.

Missouri Attorney General Andrew Bailey, a Republican, praised the Supreme Court’s decision, emphasizing that it highlighted the limits of the Biden-Harris Administration’s authority in imposing debt relief on Americans.

He stated, “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.”

A separate challenge by another group of Republican-led states against the debt relief program is ongoing in the Denver-based Tenth U.S. Circuit Court of Appeals.

The Supreme Court’s 6-3 ruling last year, driven by six conservative justices, blocked Biden’s plan to cancel $430 billion in student loan debt, which was intended to assist up to 43 million Americans and fulfill a campaign promise.

The conservative justices applied the “major questions” doctrine, a judicial principle that allows judges significant leeway to invalidate executive actions of substantial economic and political significance unless clearly authorized by Congress.