By John Kruzel
WASHINGTON (Reuters) – The U.S. Supreme Court declined on Wednesday to revive President Joe Biden’s student debt relief plan, giving a boost to Republican-led states that have sued to block it.
The justices rejected the administration’s request to temporarily lift a judicial decision that paused the plan, which is designed to lower monthly payments for millions of borrowers and speed up loan forgiveness for some.
Following the Supreme Court’s June 2023 decision blocking Biden’s earlier plan to cancel hundreds of billions of dollars in debt, his administration said it would continue providing student debt relief to as many borrowers as possible.
The White House in August 2023 launched a policy called the Saving on a Valuable Education, or SAVE, plan, which it touted as “the most affordable repayment plan ever created.”
The plan would cut monthly college undergraduate loan payments from 10% to 5% of a borrower’s discretionary income, which would save the typical borrower around $1,000 a year, according to the White House.
Other benefits of the plan include a pause on payments by borrowers making less than $32,000 per year until their income exceeded that amount. It would also provide debt forgiveness for some smaller loans in as few as 10 years, compared to the 20- or 25-year timeline under earlier rules.
The administration estimated that the plan would cost taxpayers around $156 billion over 10 years, but Republican state attorneys general argue that its actual cost totaled around $475 billion. Some parts took effect in February while others were set to take effect in July.
Seven Republican-led states sued to block the program in April 2024, arguing that the Biden administration’s U.S. Education Department had exceeded its legal authority by enacting the student debt relief plan.
In June, U.S. District Judge John Ross in St. Louis blocked the administration on a preliminary basis from implementing the provision of the SAVE plan that would grant loan forgiveness to certain borrowers.
A ruling by the St. Louis-based U.S. Court of Appeals for the Eighth Circuit on Aug. 9 went further, blocking the administration’s debt relief plan in its entirety while that case proceeded. This prompted the administration’s emergency filing to the Supreme Court.
U.S. Secretary of Education Miguel Cardona said the Biden administration strongly disagreed with the Eighth Circuit’s decision, saying it would force millions of borrowers to pay hundreds of dollars more each month.
A separate challenge by another set of Republican-led states to the administration’s debt relief program is pending in the Denver-based Tenth U.S. Circuit Court of Appeals.
The Supreme Court’s 6-3 ruling last year, powered by its six conservative justices, blocked Biden’s plan to cancel $430 billion in student loan debt – a move that had been intended to benefit up to 43 million Americans and fulfill a campaign promise.
The conservative justices invoked the “major questions” doctrine, a judicial approach that gives judges broad discretion to invalidate executive agency actions of “vast economic and political significance” unless Congress clearly authorized them in legislation.
(Reporting by John Kruzel; Editing by Chris Reese and Aurora Ellis)
