Court Blocks Biden’s Student Loan Forgiveness Plan

(ReliableNews.org) – President Joe Biden introduced the Saving on a Valuable Education (SAVE) Plan in 2023 after the Supreme Court blocked his other student loan forgiveness program. Republicans quickly filed lawsuits against the new plan. The courts have now completely blocked it.

On July 18, the 8th Circuit Court of Appeals granted an administrative stay after a group of Republican-led states asked the court to block the SAVE Plan. The new order prevents the Biden Administration from implementing the parts of the plan that weren’t already blocked by lower court rulings. In June, federal judges in Missouri and Kansas issued rulings that blocked most of the president’s plan. Those injunctions didn’t impact loans that were already forgiven.

The 10th Circuit Court of Appeals permitted the administration to continue allowing borrowers to make low payments. The 8th Circuit ruling blocked the entire SAVE Plan.

The SAVE Plan reduces the income-based repayment amount from 10% to 5% of a borrower’s discretionary income. It also fixed problems with the Public Service Loan Forgiveness (PSLF) program, which provides nurses, teachers, firefighters, government employees, and other public servants loan forgiveness after they make 120 qualifying monthly payments. Biden’s changes gave people credits toward their payments and allowed thousands to qualify for forgiveness.

Education Secretary Miguel Cardona said the court ruling means individuals who enrolled in the SAVE Plan will now have their loans put into interest-free forbearance while the case winds through the legal system. He said the ruling by the 8th Circuit “could have devastating consequences for millions of student loan borrowers crushed by unaffordable monthly payments” if the courts keep the injunction in place.

Cardona called the lawsuits “politically motivated” and accused the officials of “standing in the way of lower payments” for borrowers.

Missouri Attorney General Andrew Bailey led the lawsuit that went before the 8th Circuit Court. He celebrated the court ruling, calling the SAVE Plan “illegal” and saying it would have “saddled working Americans with half-a-trillion dollars in Ivy League debt.” He called the decision a “HUGE win” for people who don’t believe in taking handouts.

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