On Monday, July 8, three states governed by the Republican Party in the United States submitted an emergency petition to the Supreme Court to halt President Biden’s income-driven student loan repayment plan called “Saving on Valuable Education (SAVE).”
Following the approval by the Tenth Circuit Court of Appeals for the government to implement key parts of the program, South Carolina, Texas, and Alaska filed requests with the Supreme Court to stop the SAVE plan.
The SAVE plan was originally set to reduce monthly student loan payments from 10% of discretionary income to 5% this month. The program would also begin providing loan forgiveness for certain groups of borrowers.
Although the Tenth Circuit Court stopped the loan forgiveness portion, it allowed the reduction in monthly payments to proceed, prompting the states to appeal to the Supreme Court. Last year, the Supreme Court rejected Biden’s previous plan for universal debt forgiveness.
As per standard procedure, the motion on Monday was sent to Justice Neil Gorsuch, who is responsible for handling the emergency appeal against the Tenth Circuit Court.
Gorsuch could choose to refer the matter to his colleagues for a decision. Despite the Supreme Court being in summer recess, the justices will take action on urgent applications.
Given the Supreme Court’s past opposition to Biden’s loan forgiveness plans, this case has brought about a new wave of uncertainty for student loan borrowers.
The Biden administration has taken steps to allow borrowers to defer payments during the legal challenge.
Natalia Abrams, President of the nonprofit Student Debt Crisis Center, expressed frustration over the ongoing legal challenges limiting borrower forgiveness but commended the Education Department for swiftly placing three million borrowers in administrative forbearance.
On May 22 this year, the US Education Department announced a new round of loan forgiveness, totaling $7.7 billion in federal student loans. The Biden administration named this new repayment plan the “SAVE Plan,” which compared to previous versions, offers a faster path to loan forgiveness, making more individuals eligible for cancellation after 10 years instead of the previous 20. The Biden administration stated that through various initiatives, including this recent forgiveness, nearly 5 million Americans have been relieved of $167 billion in student loan debt.
According to a report by the Associated Press, Biden’s “SAVE Plan” is facing legal challenges from Republican-led states. Eleven states, including Kansas, and seven states, including Missouri, filed lawsuits in March and April this year to try and block the plan. These states argued in the federal lawsuits that Biden would need Congressional approval for a comprehensive overhaul of the federal repayment program.
(Adapted from reporting by The Hill)