Joe Biden Just Hit With Devastating Blow
The viability of a contentious student loan repayment plan is now jeopardized due to an increasing number of legal challenges. The Biden administration’s initiative, known as the Saving on a Valuable Education (SAVE) plan, aims to make college loans more manageable for millions of Americans. However, the plan has met substantial opposition, culminating in two lawsuits led by Republican states.
On Wednesday, the Biden administration appealed to the Supreme Court, seeking approval to continue reducing monthly payments for nearly three million borrowers enrolled in SAVE. This request comes at a critical time, as the program's future remains uncertain amid ongoing legal reviews in lower courts.
According to Forbes, a federal appeals court has temporarily halted the proposal, a decision that could significantly impact millions of borrowers.
The SAVE plan, introduced last year, is an income-driven repayment program that promises manageable payments and various options for loan forgiveness. Critics argue that the Biden administration has overstepped the authority granted by Congress. Recently, three GOP-led states urged the Supreme Court to uphold a temporary restriction on the program until their legal dispute is resolved.
The main concern is that implementing extensive loan forgiveness and altering repayment terms unilaterally bypasses the legislative process, setting a precedent that could affect future governance.
Opponents argue that large-scale loan forgiveness or reduction could increase federal deficits and potentially lead to higher taxes to cover the deficit. They also worry it could disincentivize educational institutions from controlling tuition costs, knowing the federal government might step in to relieve student financial burdens.
Last month, the Biden administration's efforts to provide student loan relief faced setbacks when federal courts in Kansas and Missouri issued conflicting rulings on the SAVE plan. A federal judge in Kansas issued a preliminary injunction to halt the implementation of lower payments under SAVE, which were set to begin in July. The plan aimed to reduce student loan payments by up to 50%. However, the judge allowed other parts of the SAVE initiative to continue, such as provisions for loan forgiveness after 10 to 25 years, depending on the borrower’s field of study and total amount borrowed.
Conversely, a federal court in Missouri issued an injunction against the loan forgiveness aspect of the SAVE plan but permitted the Education Department to proceed with the implementation of lower payments as planned.
Missouri has escalated its legal battle against the SAVE plan by appealing to the 8th Circuit Court of Appeals, seeking to overturn the partial injunction that blocked student loan forgiveness. On Thursday, the 8th Circuit issued an injunction that appeared to halt the entire SAVE scheme.
“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 order stated.
Forbes reports that the Court of Appeals' ruling has the potential to completely stop the SAVE plan. This would affect not only the reduced payments but also the substantial subsidies intended to manage excessive debt accumulation and ensure automatic income recertification. This court had previously halted Biden’s initial attempt to eliminate student debt.