Supreme Court leaves Biden’s new student loan repayment plan blocked

By CNN Newsource

Published August 28, 2024 11:17 AM

By Devan Cole, Katie Lobosco and John Fritze, CNN

Washington (CNN) — The Supreme Court declined on Wednesday to lift a sweeping block on President Joe Biden’s student loan repayment plan that aims to slash monthly payments and quicken the path to loan forgiveness.

The high court turned down a request from the Biden administration to put the plan back in play after lower courts blocked it this summer in a legal challenge to the plan brought by GOP-led states.

There were no noted dissents in the brief order.

Wednesday’s order has no immediate impact on the 8 million borrowers currently enrolled in the plan, known as SAVE (Saving on a Valuable Education), which was implemented nearly a year ago. In response to the deepening legal fight over the plan, the Department of Education last month placed the borrowers in an interest-free forbearance during which they are not required to make monthly student loan payments.

The White House vowed later Wednesday to “continue to aggressively defend the SAVE Plan,” which it said had so far allowed 4.5 million student borrowers to see a “zero dollar payment each month.”

“We won’t stop fighting against Republican elected officials’ efforts to raise costs on millions of their own constituents’ student loan payments,” White House spokesman Angelo Fernández Hernández said in a statement.

The latest information for borrowers can be found on the Department of Education’s website.

In an emailed statement, the department said it “will work to minimize further harm and disruption to borrowers as we await a final decision from the Eighth Circuit.”

“We are disappointed in this decision, particularly because lifting the injunction would have allowed for lower payments and other benefits for borrowers across the country,” the department said.

In an unusual line in a brief order Wednesday, the court said that it “expects” that the 8th US Circuit Court of Appeals, which is considering the challenge to the plan, “will render its decision with appropriate dispatch” – signaling that it wants the legal proceedings to play out in the lower court before it steps in on its emergency docket.

The fate of the plan, which the Congressional Budget Office estimates would cost $276 billion, remains uncertain as courts consider two legal challenges. Last month, Alaska, South Carolina and Texas asked the high court to maintain a partial block on the program while the states’ larger legal challenge to it unfolds. In a separate order Wednesday, the court also declined that request.

Student loan forgiveness was a key component of Biden’s 2020 presidential campaign, a concession to progressives who supported more liberal candidates in the Democratic primary. But the White House has repeatedly been stymied, including with an important ruling last year in which the court’s 6-3 conservative majority held that Biden had exceeded his authority by attempting to forgive hundreds of billions of student debt.

SAVE is one of the Biden administration’s most significant student loan policies. The Department of Education implemented the repayment plan last year after the Supreme Court struck down Biden’s more sweeping, one-time student loan forgiveness program.

But the SAVE plan, currently the government’s most generous student loan repayment plan, is based on a different law than the one at issue in that case. Low-income borrowers enrolled in SAVE can see lower monthly payments and a faster path to student loan forgiveness than those enrolled in other repayment plans.

Among other things, the plan raises the cap on how much money a person can make before having to make loan payments. It lowers monthly loan payments to as little as 5% of an eligible borrower’s discretionary income, reducing it from 10%. It also shortens the repayment period for certain borrowers with small loans, allowing those loans to be forgiven sooner.

This story has been updated with additional details.