US Supreme Court Declines to Revive Biden’s Student Debt Relief Plan

By John Kruzel

WASHINGTON – On Wednesday, the U.S. Supreme Court declined to reinstate President Joe Biden’s student debt relief plan, a decision that benefits Republican-led states that have challenged it in court.

The justices refused the administration’s request to lift a lower court’s ruling that had put the plan on hold. This plan aimed to reduce monthly payments for millions of borrowers and accelerate loan forgiveness for some individuals.

After the Supreme Court’s June 2023 ruling blocked Biden’s earlier initiative to erase hundreds of billions of dollars in student debt, the administration committed to continuing support for student debt relief within its legal framework. In August 2023, the White House introduced a new policy known as the Saving on a Valuable Education (SAVE) plan, which it promoted as “the most affordable repayment plan ever created.”

The SAVE plan is designed to lower monthly payments for college undergraduate loans from 10% to 5% of a borrower’s discretionary income, potentially saving the average borrower about $1,000 annually. Additionally, it provides a payment pause for borrowers earning less than $32,000 per year until their income surpasses that threshold. The plan also allows for debt forgiveness on smaller loans within as few as 10 years, a reduction from the previous 20- or 25-year timelines.

The administration projected that implementing the SAVE plan would cost taxpayers approximately $156 billion over ten years, while Republican state attorneys general contended that the actual costs could reach around $475 billion. Some elements of the plan began in February, with others expected to roll out in July.

In April 2024, seven Republican-led states sued to block the program, claiming that the U.S. Education Department had overstepped its legal authority in launching the student debt relief initiative. In June, a U.S. District Judge in St. Louis issued a preliminary injunction against the administration’s rollout of the SAVE plan’s loan forgiveness provisions.

Subsequently, the St. Louis-based U.S. Court of Appeals for the Eighth Circuit ruled on August 9 to halt the entire debt relief initiative while the case continued. This led the administration to file an emergency request with the Supreme Court.

U.S. Secretary of Education Miguel Cardona expressed strong disagreement with the Eighth Circuit’s ruling, arguing that it would force millions of borrowers to pay significantly more each month.

Missouri’s Attorney General Andrew Bailey, a Republican, praised the Supreme Court’s decision, emphasizing Missouri’s role as the lead plaintiff in the case. He remarked, “This court order serves as a stark reminder that Congress did not grant the Biden-Harris Administration the authority to saddle working Americans with $500 billion in someone else’s debt. This is a huge win for every American who still believes in paying their own way.”

Another ongoing challenge to the administration’s debt relief initiative is being heard in the Denver-based Tenth U.S. Circuit Court of Appeals.

The Supreme Court’s 6-3 ruling last year, led by its six conservative justices, blocked Biden’s initial plan to cancel $430 billion in student loan debt. This cancellation was intended to aid up to 43 million Americans and fulfill a commitment made during his campaign. The conservative justices utilized the “major questions” doctrine, which grants wide judicial discretion in invalidating executive agency actions of significant economic and political importance, unless explicitly authorized by Congress.