Biden’s newest student loan repayment plan temporarily blocked by Supreme Court

WASHINGTON — The U.S. Supreme Court on Wednesday stalled the Biden administration’s latest efforts to provide student debt relief to millions of borrowers to go forward while the appeals process unfolds.

The Saving on a Valuable Education (SAVE) plan provided lower monthly loan payments for borrowers and lessened the time it takes to pay off their debt. The program came shortly after the Supreme Court struck down an earlier student loan forgiveness plan from the administration in June 2023 that would have canceled more than $400 billion in debt.

But the SAVE plan was quickly met with a wave of legal challenges from a coalition of GOP-led states in two lawsuits stemming from Missouri and Kansas.

Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma filed a federal lawsuit alongside Missouri in April against the administration over the plan.

The Supreme Court on Wednesday allowed an August ruling from the U.S. Court of Appeals for the 8th Circuit that temporarily halted the plan to remain in effect. The appellate decision followed a federal judge in Missouri issuing a preliminary injunction blocking the plan in late June.

In its decision, the nation’s highest court said it expects the 8th Circuit to “render its decision with appropriate dispatch.”

Missouri Attorney General Andrew Bailey praised the Supreme Court’s decision in a statement Wednesday, calling it a “huge win for every American who still believes in paying their own way.”

On the other hand, a spokesperson for the U.S. Department of Education said “we are disappointed in this decision, particularly because lifting the injunction would have allowed for lower payments and other benefits for borrowers across the country,” per a statement shared with States Newsroom.

The spokesperson said the department “will work to minimize further harm and disruption to borrowers as we await a final decision from the Eighth Circuit,” adding that “the Biden-Harris administration remains committed to supporting borrowers and will continue to fight for the most affordable repayment options for millions of people across the country.”

In a statement, Mike Pierce, executive director of the Student Borrower Protection Center, said “in rejecting this appeal, the Supreme Court perpetuates the 8th Circuit’s bogus legal fiction that pausing affordable payments is ‘preserving the status quo.’”

“This is ludicrous. Millions of people were repaying their student loans. Now they are in limbo,” Pierce added.

Meanwhile, Kansas, Alabama, Alaska, Idaho, Iowa, Louisiana, Montana, Nebraska, South Carolina, Texas and Utah also filed a lawsuit over the plan in March.

A federal judge in Kansas dismissed eight of those states — allowing only Alaska, South Carolina and Texas to move forward with their challenge — and issued a preliminary injunction.

In late June, the U.S. Court of Appeals for the 10th Circuit allowed parts of the SAVE plan to go forward — forcing Alaska, South Carolina and Texas to file an emergency request to the Supreme Court to vacate the stay.

But the Supreme Court rejected this attempt from the states’ attorneys general on Wednesday, saying that “applicants represent that they do not require emergency relief from this Court as long as the Eighth Circuit’s injunction … is in place.”