(Scypre.com) – The U.S. Supreme Court has rejected an emergency request from the Biden administration seeking to reinstate its latest federal student loan debt plan. This plan, introduced as the Saving on a Valuable Education (SAVE) initiative, was an attempt to navigate legal challenges following the Court’s previous ruling that blocked President Biden’s earlier loan forgiveness program.
On Wednesday, the Court denied the administration’s plea to lift a nationwide injunction imposed by an appeals court without any noted dissents. The order directed the appeals court to make its decision promptly.
In July 2023, the Education Department finalized the SAVE plan, which proposed various provisions aimed at easing student loan repayment burdens. Key aspects included capping repayments for undergraduate loans at 5% of borrowers’ incomes, significantly reducing the previous 10% cap. The plan also aimed to limit accrued interest and shorten repayment periods for smaller loans, enabling quicker forgiveness.
However, the SAVE plan faced immediate legal challenges from conservative-leaning states, led by Missouri. These states argued that the administration lacked the congressional authority to impose such a sweeping policy, citing the “major questions” doctrine. This doctrine asserts that federal agencies need explicit authorization from Congress to enact policies with significant economic impacts. Missouri Attorney General Andrew Bailey hailed the Supreme Court’s decision as a victory, stating, “This court order is a stark reminder to the Biden-Harris administration that Congress did not grant them the authority to saddle working Americans with $500 billion in someone else’s Ivy League debt.”
The legal battle over the SAVE plan has seen various rulings, including an August 9 decision by the 8th U.S. Circuit Court of Appeals in St. Louis, which issued a broad injunction halting key provisions of the plan. Solicitor General Elizabeth Prelogar argued that the changes were permissible under a 1993 federal law granting the Education Department the authority to determine repayment terms. She criticized the appeals court’s injunction as “vastly overbroad,” claiming it disrupted borrowers’ expectations who have been making payments under previous terms for years.
The Supreme Court’s decision to reject the administration’s plea leaves the SAVE plan in a precarious position, with ongoing legal challenges continuing to cast uncertainty over its future. Despite this, around 8 million borrowers are already enrolled in the SAVE plan, benefitting from reduced repayment amounts.