Biden Unveils Fresh Wave of Student Loan Forgiveness Despite GOP Legal Hurdles

President Joe Biden announced a significant new round of student loan forgiveness on Thursday, aiming to cancel $1.2 billion in debt for 35,000 public service workers. This initiative targets teachers, nurses, law enforcement officials, and first responders who have applied for relief under the Public Service Loan Forgiveness program.

However, within hours, older components of Biden’s loan forgiveness strategy, particularly the Saving on a Valuable Educate or SAVE Plan, faced legal hurdles. The Eighth Circuit Court of Appeals granted a pause on the program following requests from Republican-led states, while they seek a long-term injunction. This decision amplifies an earlier ruling by U.S. District Judge John Ross from the Eastern District of Missouri, which had already stayed portions of the program.

Thursday’s announcement pushes the total number of beneficiaries of debt forgiveness to 4.76 million. In a statement, Biden praised his administration’s consistent efforts to ease the financial burdens of nearly 43 million Americans. He pointed to previous actions, such as increasing the maximum Pell Grant and enhancing income-driven repayment plans, as part of a broader strategy to cancel debts for over 30 million people making less than $150,000 annually.

“From day one of my administration, I promised to fight to ensure higher education is a ticket to the middle class, not a barrier to opportunity,” Biden stated. “I will never stop working to make higher education affordable — no matter how many times Republican elected officials try to stop us.”

The SAVE Plan, initially announced in 2022 and slated to start on July 1, sought to reduce monthly payments based on income and family size, prevent balance growth from unpaid interest, and offer debt forgiveness for those who borrowed $12,000 or less within ten years. Judge Ross blocked the Department of Education from granting further forgiveness under this plan but left other aspects intact.

The hybrid approach that followed, involving elements of the previous REPAYE plan, has also been halted. The appellate court issued a temporary stay on all remaining parts of the plan in a brief order posted Thursday.

Additionally, Biden had rolled out a broader $430 billion program aimed at canceling up to $20,000 in debt for about 43 million Americans. This plan faced its own legal challenges and was blocked by the Supreme Court in a June 2023 ruling where Chief Justice John Roberts found Biden’s approach impermissible.

The SAVE Plan has faced multiple legal obstacles, including another Republican-led challenge in Kansas. A federal judge there initially blocked parts of the SAVE Plan, a decision that was later put on hold by the 10th Circuit Court of Appeals in Denver. GOP attorneys general have appealed to the Supreme Court, seeking to reinstate the prior injunction. The Supreme Court will resume its sessions in October.