The Supreme Court has dealt a significant blow to the Biden administration's efforts to provide relief for federal student loan borrowers.
According to NBC News, the court has rejected the Biden administration's request to revive its latest student loan debt relief plan.
The plan in question, known as the Saving on a Valuable Education (SAVE) plan, was introduced in July 2023 following the Supreme Court's ruling against the administration's previous loan forgiveness program. The new initiative aimed to reduce monthly payments and provide other benefits to borrowers but faced legal challenges from several conservative-leaning states led by Missouri.
The Supreme Court's brief order did not include any noted dissents. It instructed the appeals court currently handling the case to "render its decision with appropriate dispatch." This suggests that while the high court is not reviving the plan immediately, it expects the lower court to address the issue promptly.
The SAVE plan included provisions to cap undergraduate loan repayments at 5% of borrowers' incomes, down from the previous 10%. It also proposed limits on accrued interest and shorter payment periods for certain small loans, potentially leading to loan forgiveness.
Challengers to the plan argued that it would require up to $475 billion in spending not authorized by Congress. They invoked the "major questions" doctrine, which the Supreme Court's conservative justices have used to limit federal agencies' power to implement sweeping new policies without explicit congressional approval.
The Biden administration expressed disappointment with the Supreme Court's decision. An Education Department spokesperson stated that they would work to minimize further disruption to borrowers while awaiting a final decision from the Eighth Circuit Court of Appeals.
In court papers, Solicitor General Elizabeth Prelogar argued that the changes to repayment amounts are permitted under a 1993 federal law. This law allows the Education Department to determine the "appropriate portion" of income for calculating payment amounts and setting repayment timelines.
Prelogar also contended that the appeals court's injunction was "vastly overbroad," potentially affecting previous changes to repayment terms dating back to 1994. She argued this could disrupt the expectations of borrowers who have been making payments for years or even decades.
Missouri Attorney General Andrew Bailey celebrated the Supreme Court's decision, stating:
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.
The SAVE plan has faced legal challenges in multiple courts, with judges blocking parts of it in different jurisdictions. However, the Eighth Circuit Court of Appeals' decision has become the most significant, as it imposed a more sweeping injunction on the plan's implementation.
Despite these legal setbacks, approximately 8 million people are already enrolled in the SAVE plan, benefiting from previously implemented provisions that have allowed for reduced repayment amounts. The full impact of the Supreme Court's decision on these borrowers and future applicants remains to be seen.
The Supreme Court's refusal to revive Biden's student loan relief plan represents a significant obstacle to the administration's efforts to address student debt. The decision leaves the fate of the SAVE plan in the hands of lower courts, particularly the Eighth Circuit. As legal battles continue, millions of borrowers face uncertainty regarding potential changes to their loan repayment terms. The administration maintains its commitment to exploring options for reducing the burden on student loan borrowers despite ongoing legal challenges.
