Supreme Court keeps lock on Biden’s student loan repayment plan
Kelsey Reichmann
WASHINGTON (CN) — After an extended delay, the Supreme Court on Wednesday kept President Joe Biden’s student loan repayment plan on pause, rejecting a pair of emergency applications to the court.
Biden’s SAVE program (a backronym for Saving on Valuable Education) was blocked by the lower courts while the justices considered an emergency appeal from almost two dozen Republican-led states aiming to thwart the administration’s student debt relief efforts.
As the application languished on the Supreme Court’s emergency docket for over a month, the Eighth Circuit granted a temporary stay blocking SAVE on July 18 and then solidified its injunction on Aug. 9.
The Biden administration filed a subsequent competing emergency application, seeking to put the repayment plan back on the books.
The justices rejected both emergency applications, choosing to let the lower court rulings stand. In the order on the states’ application, the court said there was no longer a need for relief because of the lower court injunction.
The high court did not explain its ruling on Biden’s application but said it expects the Court of Appeals to "render its decision with appropriate dispatch.” Following the Eighth Circuit’s ruling, the case will likely return to the Supreme Court, when the justices can review its merits.
The Education Department placed SAVE plan borrowers into an interest-free forbearance while litigation continues, said Miguel Cardona, the secretary of education. He said the ruling would force millions of borrowers to pay hundreds more each month and threaten loan forgiveness for those expecting it after 25 years of payments.
“It’s shameful that politically motivated lawsuits waged by Republican elected officials are once again standing in the way of lower payments for millions of borrowers,” Cardona said in a statement.
The program ties loan payments to income and household size, and was aimed at reducing borrowers’ monthly payments.
In March, a group of 11 states challenged the plan in a Kansas lawsuit. A federal judge narrowed the scope to three states — South Carolina, Alaska and Texas — that could be injured by the program and issued a preliminary injunction.
The Department of Education halted its enforcement of SAVE until the 10th Circuit intervened and stayed the injunction.
Seven additional states led by Missouri brought a similar challenge in June, claiming that the Missouri Higher Education Loan Authority would lose out on servicing fees under the SAVE plan. The loan servicer commonly called MOHELA was at the center of the case that took down Biden’s student debt forgiveness plan in 2023.
In a 6-3 ruling, the conservative majority said Biden’s $430 billion program exceeded executive authority, requiring congressional approval. Republican-led states claimed the same principle applied to Biden’s repayment program.
The trio led by South Carolina filed an emergency appeal before the justices to prevent the repayment plan from taking effect.
“The legality of a program that costs taxpayers $45 billion more than the program the court considered and rejected in Nebraska is clearly ‘a question of great significance’ for this court’s resolution,” South Carolina assistant deputy solicitor general Joseph Spate wrote in a brief before the court.
South Carolina presented the court with options beyond pausing the SAVE program, like hearing arguments next term on the plan’s legality or using its 2023 ruling to toss the program altogether.
The Biden administration warned that pausing monthly payments under the SAVE plan would be complex, requiring the department to extend the forbearance period for months while payments were recalculated.