On Wednesday, the Supreme Court decided to keep the Biden administration’s new student debt relief plan on hold. This decision came as several lawsuits challenging the legality of the plan continue to move through lower courts.
The justices denied the administration’s request to reinstate most of the plan, which had previously been blocked by the 8th U.S. Circuit Court of Appeals. This refusal means that the plan remains paused while further legal battles ensue.
In an unsigned order, the Supreme Court mentioned that it expects the appeals court to deliver a more detailed ruling on the plan promptly. The outcome of these court proceedings could significantly impact the future of the Biden administration’s student debt relief efforts.
The Biden administration’s plan, known as the SAVE (Saving on a Valuable Education) plan, seeks to expedite loan forgiveness for millions of borrowers. One of its key features includes reducing monthly income-based repayments from 10% to 5% of a borrower’s discretionary income.
Another significant aspect of the SAVE plan is its provision for low-income borrowers. It proposes that individuals earning less than 225% of the federal poverty line, approximately $32,800 annually for a single person, would not be required to make loan payments.
This is not the first time the Biden administration’s student debt relief efforts have faced legal hurdles. Last year, the Supreme Court’s conservative majority struck down an earlier proposal that would have canceled over $400 billion in student loans.
The cost of the SAVE plan has been a contentious point, with varying estimates from different sources. While Republican-led states challenging the plan estimate the cost at $475 billion over ten years, the Biden administration, citing the Congressional Budget Office, places the figure at $276 billion.
Two significant legal challenges to the SAVE plan are currently working their way through federal courts. In June, separate rulings from Kansas and Missouri judges blocked much of the plan, although some provisions, such as those allowing for lower monthly payments, were allowed to continue.
The 10th U.S. Circuit Court of Appeals had previously issued a ruling that permitted the Department of Education to proceed with certain aspects of the plan. However, the complete blocking of the plan by the 8th Circuit rendered this ruling less impactful.
The Supreme Court’s decision to leave the block in place is a temporary setback for the Biden administration. The ongoing legal proceedings will ultimately determine whether the plan can move forward, affecting millions of borrowers waiting for relief.
