Court ruling halts Biden's student debt relief

In a significant legal setback for President Joe Biden’s administration, a federal appeals court has blocked the implementation of a crucial student debt relief plan aimed at easing the financial burden for millions of Americans.

On Thursday, the 8th U.S. Circuit Court of Appeals, based in St. Louis, issued an administrative stay, effectively halting parts of the Biden administration’s Saving on a Valuable Education (SAVE) Plan.

The ruling came in response to a request from seven Republican-led states, spearheaded by Missouri Attorney General Andrew Bailey, to block the plan.

The SAVE Plan, announced by President Biden in 2022, was designed to provide more generous terms than previous income-based repayment plans. It aimed to reduce monthly payments for eligible borrowers and allow those with original principal balances of $12,000 or less to have their debt forgiven after 10 years.

The plan was part of a broader $430 billion initiative that sought to cancel up to $20,000 in debt for up to 43 million Americans, a campaign promise that was ultimately thwarted by the U.S. Supreme Court in June 2023.

Last month, U.S. District Judge John Ross in St. Louis had already blocked the Department of Education from granting further loan forgiveness under the SAVE Plan but had not entirely halted the plan. Following this, the coalition of Republican state attorneys general sought a more comprehensive injunction, which has now been granted by the 8th Circuit.

Missouri Attorney General Andrew Bailey celebrated the ruling, taking to the social platform X to call it a “huge win for every American who still believes in paying their own way.” He criticized the student loan plan, asserting that it “would have saddled working Americans with half-a-trillion dollars in Ivy League debt.”

In response, an Education Department spokesperson stated that the department is assessing the ruling’s impact and will communicate directly with any borrowers affected by the court’s decision. The spokesperson also emphasized that the department “will continue to aggressively defend the SAVE Plan.”

President Biden and his administration have consistently defended the SAVE Plan, which had already begun to take effect. According to the Education Department, approximately 8 million borrowers are already enrolled in the plan, with 4.5 million of those having their monthly payments reduced to $0. To date, $5.5 billion has been granted to 414,000 borrowers through the SAVE Plan.

The administration estimates that the SAVE Plan would cost taxpayers around $156 billion over 10 years. However, Republican state attorneys general argue that the true cost could be around $475 billion, a point of contention that has fueled the ongoing legal battles.

This ruling is part of a broader legal struggle over student debt relief. Another federal judge in Kansas had also blocked parts of the SAVE Plan last month. However, the 10th U.S. Circuit Court of Appeals, based in Denver, put part of that decision on hold. The group of Republican-led states has since petitioned the U.S. Supreme Court to reinstate that injunction.