On Thursday, the U.S. Eighth Circuit Court of Appeals issued a ruling that blocks the Biden administration from implementing the latest version of its student loan debt relief plan, designed to reduce monthly payments for borrowers. The ruling represents a significant setback for the Biden administration’s efforts.
This decision comes in response to a request from seven Republican-led states to halt the Education Department’s plan. Fox Business reports that last month, a U.S. District Court in St. Louis prevented the Education Department from proceeding with certain aspects of the Biden administration’s Saving on a Valuable Education (SAVE) plan, although not all elements were blocked. The SAVE plan aims to offer more favorable terms for borrowers enrolled in income-driven repayment plans by reducing monthly payments for those meeting specific income criteria. It also provides debt forgiveness for borrowers with original principal balances of $12,000 or less after a ten-year period.
State attorneys general, led by Missouri’s Andrew Bailey, requested the 8th Circuit to block the remaining portions of the SAVE plan last week. The court granted this request with a one-page ruling, imposing an administrative stay on the remainder of the SAVE plan.
“The Court granted our emergency motion to BLOCK Joe Biden’s entire illegal student loan plan, which would have saddled working Americans with half-a-trillion dollars in Ivy League debt,” Bailey wrote in a post on X, formerly known as Twitter. “HUGE win for every American who still believes in paying their own way.”
An Education Department spokesperson told FOX Business, “We are assessing the impacts of this ruling and will be in touch directly with borrowers with any impacts that affect them.”
The spokesperson continued, “Our Administration will continue to aggressively defend the SAVE Plan – which has been helping over 8 million borrowers access lower monthly payments, including 4.5 million borrowers who have had a zero dollar payment each month. And, we won’t stop fighting against Republican elected officials’ efforts to raise costs on millions of their own constituents’ student loan payments.”
Education Secretary Miguel Cardona released a statement Thursday night expressing concern over the ruling’s potential impact. He warned that the decision could have “devastating consequences for millions of student loan borrowers crushed by unaffordable payments if it remains in effect.”
Cardona assured that borrowers enrolled in the SAVE plan would be “placed in an interest-free forbearance while our Administration continues to vigorously defend the SAVE Plan in court.”