Written by Ashton Snyder on
 June 26, 2024

Federal Judges Block Large Portion of Biden’s Student Debt Relief Plan

Joe Biden's student debt relief plan encountered judicial hurdles as two federal judges blocked a substantial part of the initiative.

According to Daily Mail, two federal judges from Kansas and Missouri halted portions of Biden's student debt relief plan, which involved nearly $160 billion and impacted about 4.6 million borrowers.

U.S. District Judge Daniel Crabtree in Wichita, Kansas, issued a ruling that halted the implementation of plans intended to reduce monthly payments and accelerate loan forgiveness, which were scheduled to take effect on July 1. Shortly after that, U.S. District Judge John Ross in St. Louis, Missouri, placed a preliminary injunction against further loan forgiveness under the SAVE plan.

Judicial Orders Disrupt Plans to Lower Payments

The SAVE plan, designed to align monthly payments with a borrower's income and family size, has reportedly already lowered payments to zero for over half of its eight million users. The Biden administration introduced this initiative after the Supreme Court halted the initial loan forgiveness program.

With these judicial decisions, the administration must now cease canceling federal student debt for individuals enrolled in the plan. Despite the significant impact, the White House has yet to comment on the recent developments.

Missouri's Ongoing Battle Over Student Loan Plans

Missouri has a history of legal conflicts with the Biden administration, including a Supreme Court case related to loan cancellation. The Supreme Court previously ruled that the loan cancellations would financially impact Missouri due to its connection with the Missouri Higher Education Loan Authority (MOHELA).

The latest lawsuits involve Missouri and six other states: Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma. The lawsuit contends that the SAVE Plan undermines the Public Service Loan Forgiveness (PSLF) program and hampers the recruitment and retention of state employees.

Loan Program vs. Grant Program Debate

One key argument in the lawsuit is that the SAVE plan effectively turns the student loan program into a grant program without congressional authorization. The Biden administration's plan aims to consolidate student loans into a single federal debt and consider years of active repayment for forgiveness eligibility.

"This is not a student loan program. It is a grant program that Congress never authorized," according to the lawsuit. This argument underscores a fundamental contentious issue about the nature and purpose of the SAVE Plan.

In contrast, US Under Secretary of Education James Kvaal emphasized the administration's commitment to ensuring that borrowers receive credit for every month they've earned toward forgiveness. "The Department is working swiftly to ensure borrowers get credit for every month they've rightfully earned toward forgiveness," Kvaal stated.

Administration's Push for Simplified Loan Management

The relief plan's suspension represents another significant setback for the Biden administration's broader efforts to address student loan debt. Despite these challenges, the administration continues to advocate for more streamlined student loan management and forgiveness protocols.

In summary, President Joe Biden's student debt relief plan encountered significant judicial setbacks this week, influencing nearly $160 billion in relief aimed at 4.6 million borrowers. The plan, intended to lower monthly payments and expedite loan forgiveness, has been blocked by two federal judges from Kansas and Missouri.

The SAVE Plan, already providing critical relief to millions, is now in legal limbo due to lawsuits from multiple states, arguing it operates as a grant program unauthorized by Congress. This legal strife underscores the administration's struggle to address the student loan crisis and may shape future policies in this arena.

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About Ashton Snyder

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