On Thursday, a federal appeals court in the United States blocked the Biden administration from continuing to implement a new student loan forgiveness program aimed at reducing the repayment amount for millions of American students. The decision was made by the Eighth Circuit Court of Appeals in St. Louis, Missouri, in response to a request filed by seven Republican-led states, which suspended a portion of the Department of Education’s student loan forgiveness program that had not been halted by a lower court.
Judge John Ross in St. Louis issued a ruling last month that blocked the Department of Education from further reducing student loan debt under the “Saving on a Valuable Education” (SAVE) program initiated by the Biden administration. However, the ruling did not stop the entire program.
Compared to previous income-based repayment plans, the Biden administration’s student loan forgiveness program offers more lenient conditions, reducing monthly payments for eligible borrowers and allowing those with original loan balances of $12,000 or less to have their debts forgiven after 10 years.
Seven states led by Republican governors opposed Judge Ross’s ruling, with Missouri Attorney General Andrew Bailey leading the charge. Last week, the attorneys general of these states filed an appeal requesting the Eighth Circuit Court of Appeals to block the implementation of the remaining parts of the SAVE program. The court issued a one-page ruling on Thursday approving the temporary halt of the lower court’s decision.
Bailey celebrated the victory on social media following the court’s decision.
The Department of Education in the United States has not yet commented on the matter.
President Biden, a Democrat, announced the SAVE program in 2022, along with a broader plan totaling up to $430 billion aimed at forgiving student loan debts up to $20,000 for as many as 43 million Americans, fulfilling a campaign promise made in 2020. This plan was ultimately blocked by the conservative-leaning Supreme Court in June 2023.
The SAVE program was scheduled to take full effect on July 1, but certain parts of it had already been implemented prior to the court’s ruling.
The Department of Education announced on Thursday that through the SAVE program, they had forgiven $5.5 billion in student loan debt for 414,000 borrowers.