The Biden administration's ambitious student debt relief initiative, known as the Saving on a Valuable Education (SAVE) plan, has been dealt a significant blow.
A federal appeals court has ruled that the administration overstepped its authority in implementing the plan, which aimed to ease the financial burden on millions of student loan borrowers by reducing their monthly repayments.
According to Newsweek, the SAVE plan was touted by the Biden administration as the "most affordable student loan repayment plan ever." It offered more lenient terms than other income-based repayment plans, with some borrowers' monthly payments reduced to as low as $0.
Furthermore, it provided for the forgiveness of some loans after a decade of payments. However, the court's decision implies that borrowers enrolled in the SAVE plan will likely face increased monthly payments as they transition to alternative repayment plans. The shorter timeframe for debt forgiveness, a key feature of the SAVE plan, will also be lost to eligible borrowers.
On February 18, the 8th Circuit Court of Appeals, based in St. Louis, sided with Republican-led states that had filed a lawsuit to halt the SAVE plan. The court had previously put the plan on hold last year. The three-judge panel, all appointed by Republicans, ruled that the Biden administration's Education Department had exceeded its authority by using a provision of the Higher Education Act to include debt forgiveness in the SAVE plan.
U.S. Circuit Judge L. Steven Grasz, a Trump appointee, 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 itexplicitly stating the Secretary should cancel, discharge, repay, or assume the remaining unpaid balance." Grasz further stated that the Biden administration had "gone well beyond this authority by designing a plan where loans are largely forgiven rather than repaid."
Missouri Attorney General Andrew Bailey, a Republican who spearheaded the legal challenge, celebrated the ruling as a significant victory. He 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, criticized the Biden administration for misleading students into believing their debt would simply vanish. He 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, Biden's education secretary, expressed concern over the potential fallout from the court's decision. He said, "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 further emphasized the urgency of the SAVE plan, stating, "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."
The court's ruling marks another setback for Biden's student loan forgiveness efforts. Despite his inability to fulfill his promise of broad student loan forgiveness, his administration did manage to cancel the student debt for more than 5 million Americans.
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