Supreme Court Upholds Biden’s Student Loan Repayment Strategy

WASHINGTON (CN) — On Wednesday, the Supreme Court opted to keep President Joe Biden’s student loan repayment plan on hold, rejecting two emergency applications that sought to implement it. The president’s SAVE program (Saving on Valuable Education) faced opposition in lower courts, where nearly two dozen Republican-led states filed an emergency appeal against the administration’s debt relief measures.

This pause by the Supreme Court follows a series of legal challenges. The Eighth Circuit initially blocked the SAVE program on July 18, with the injunction being affirmed on August 9. In response, the Biden administration filed a competing emergency application to revive the repayment plan.

However, the justices dismissed both applications, affirming the lower court’s rulings. In their order regarding the states’ appeal, the court indicated that relief was unnecessary due to the existing injunction. While the rationale for rejecting Biden’s request was not detailed, the court expressed an expectation for the Court of Appeals to act swiftly on the matter. The case is poised to return to the Supreme Court once the appellate court issues its decision.

Miguel Cardona, the Secretary of Education, stated that borrowers under the SAVE plan would enter an interest-free forbearance during the ongoing litigation. He expressed concern that the ruling may increase financial burdens on millions of borrowers, potentially costing them hundreds of dollars each month and jeopardizing long-term loan forgiveness for those who have met the 25-year payment threshold.

“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,” Cardona remarked in a statement. The SAVE program aims to adjust loan payments based on income and household size, reducing monthly financial obligations for borrowers.

The legal challenges began in March when 11 states initiated a lawsuit in Kansas. A federal judge limited the challenge to three states — South Carolina, Alaska, and Texas — citing potential injury from the program and issuing a preliminary injunction. The Education Department paused enforcement of the SAVE plan until the 10th Circuit intervened.

In June, seven more states, led by Missouri, filed a similar suit, arguing that the Missouri Higher Education Loan Authority could lose servicing fees due to the SAVE program. The loan servicer, commonly referred to as MOHELA, was integral to the previous legal battle that halted Biden’s student debt forgiveness initiative earlier this year.

A 6-3 decision by the conservative majority ruled that Biden’s $430 billion debt relief plan exceeded his executive authority, requiring congressional endorsement. Republican-led states contended that the same principle applies to the repayment program, prompting South Carolina to submit an emergency appeal to prevent its implementation.

Joseph Spate, assistant deputy solicitor general of South Carolina, emphasized the importance of reviewing the legality of a program projected to cost taxpayers an additional $45 billion. He suggested alternatives, including evaluating the program’s legality next term or outright dismissal based on the court’s prior ruling.

The Biden administration cautioned that halting the SAVE program would complicate monthly payment processes, necessitating an extended forbearance period while recalculating payments.