Federal Court Halts Student Loan Payment Program In Another Blow To Biden Admin

A federal appeals court issued a temporary halt on Thursday on President Joe Biden’s income-driven repayment program for student loans due to challenges to its legality. The Saving on a Valuable Education (SAVE) plan …

Jaryn CrousonJul 19, 20243 min read

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A federal appeals court issued a temporary halt on Thursday on President Joe Biden’s income-driven repayment program for student loans due to challenges to its legality.

The Saving on a Valuable Education (SAVE) plan, which was introduced in 2023, seeks to provide new repayment methods for student loan borrowers, including lowering monthly payments based on income and minimizing interest payments. The 8th Circuit Court of Appeals halted the plan in its entirety in order to give the court time to issue a final ruling after also issuing a partial injunction in June.

The order was petitioned by the states of Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma due to an April lawsuit that is still ongoing. The lawsuit challenges Biden’s authority to implement drastic loan forgiveness measures, alleging the president is overstepping his role and that the plan is illegal.

“Appellants’ emergency motion for an administrative stay prohibiting the appellees from implementing or acting pursuant to the Final Rule until this Court rules on the appellants’ motion for an injunction pending appeal is granted,” the court filing reads.

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A spokesman for the

Education

Department said the federal agency is reviewing the ruling and its effects on borrowers,

according

to the Washington Post.

“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 if it remains in effect. 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,” U.S. Secretary of Education Miguel Cardona said in a press release following the decision.

“Already, we’ve approved an unprecedented $169 billion in relief for nearly 4.8 million Americans, including teachers, veterans, and other public servants, students who were cheated by their colleges, borrowers with disabilities, and more,” Cardona continued. “And from larger Pell Grants to free community college, President Biden, Vice President Harris, and I continue to believe that college affordability is a cause worth fighting for — and we’re not giving up.”

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The SAVE plan is expected to cost taxpayers $156 billion over the course of ten years and has already dropped the balances of 414,000 enrollees, according to the Post. More than 8 million people who have taken out federal loans are enrolled in the repayment plan.

In 2023, the Supreme Court ruled that a separate plan from the Biden administration that would forgive tens of thousands of dollars for each borrower was unconstitutional, stating that the Secretary of Education overreached his powers when using emergency authority to do so. The Biden administration’s attempts following the court loss have faced a multitude of challenges, including lawsuits citing the court’s ruling and a House bill aimed at repealing Biden’s plan due to its unconstitutionality.

The Department of Education did not immediately respond to a request for comment.

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