An appeals court has ruled that former President Joe Biden’s administration lacked the authority to pursue a student debt relief plan that lowered monthly repayments for millions of borrowers.
Newsweek has contacted the Department of Education for comment via email.
Why It Matters
The Biden administration described the Saving on a Valuable Education (SAVE) plan as the “most affordable student loan repayment plan ever.” It was designed to provide more lenient terms than other income-based repayment plans, with monthly payments for some borrowers as low as $0. It also provided forgiveness for some loans after 10 years of payments.
The court’s ruling means borrowers enrolled in the SAVE plan will likely see their monthly payments rise when they switch to alternative repayment plans, and eligible borrowers will lose the shorter time frame for debt forgiveness offered under the SAVE plan.
A stock photo of a student debt relief activist at a rally outside the U.S. Supreme Court in Washington, D.C., on June 30, 2023. A stock photo of a student debt relief activist at a rally outside the U.S. Supreme Court in Washington, D.C., on June 30, 2023. Kevin Dietsch/Getty Images
What To Know
On February 18, the 8th Circuit Court of Appeals sided with Republican-led states that sued to block the SAVE plan. The court, which is in St. Louis, had put the SAVE plan on hold last year.
In Tuesday’s ruling, the three-judge panel held that Biden’s Education Department had overstepped its authority by trying to use a provision of the Higher Education Act that allows for income-based loan repayment plans to include debt forgiveness to the extent provided by the SAVE plan.
U.S. Circuit Judge L. Steven Grasz, whom President Donald Trump appointed during his first term, wrote in the ruling, “Rather than implying by omission or other ambiguities, Congress has spoken clearly when creating a repayment plan with loan forgiveness or otherwise authorizing it—explicitly stating the Secretary should cancel, discharge, repay, or assume the remaining unpaid balance.”
Grasz, whose opinion was joined by two other Republican-appointed judges, said the Biden administration had “gone well beyond this authority by designing a plan where loans are largely forgiven rather than repaid.”
What People Are Saying
Missouri Attorney General Andrew Bailey, a Republican who led the legal challenge, wrote on X, formerly Twitter: “Though @JoeBiden is out of office, this precedent is imperative to ensuring a president cannot force working Americans to foot the bill for someone else’s Ivy League debt. HUGE win.”
James Bergeron, the Education Department’s acting under secretary, told Reuters: “The Biden administration misled students into believing their debt would simply disappear, despite the law being clear that a taxpayer-funded bailout is blatant executive overreach.”
Miguel Cardona, who served as Biden’s education secretary, said in July after the court blocked the SAVE plan: “Today’s ruling from the 8th Circuit blocking President Biden’s SAVE plan could have devastating consequences for millions of student loan borrowers crushed by unaffordable monthly payments.”
He added: “It wasn’t so long ago that a million borrowers defaulted on their student loans every single year, mainly because they couldn’t afford the payments. The SAVE plan is a bold and urgently needed effort to fix what’s broken in our student loan system and make financing a higher education more affordable in this country.”
What Happens Next
The ruling is another blow to Biden’s student loan forgiveness efforts. Though he was unable to fulfill his pledge for broad student loan forgiveness, his administration oversaw the student debt cancellation for more than 5 million Americans.
It remains unclear how soon borrowers may be removed from the SAVE plan, but they are likely to see their monthly repayments rise when they enroll in alternative plans.
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