On Monday, two US federal judges in Missouri and Kansas, at the urging of Republican-led states, blocked the Biden administration from further implementing a new student loan relief plan that lowers payments.
US District Judge Danie Crabtree in Wichita, Kansas, blocked the US Department of Education from implementing a student loan repayment plan that is not already in place. This plan would cut borrowers’ monthly payments and provide a quicker route to debt forgiveness. Crabtree’s decision came just before US District Judge John Ross in St. Louis, Missouri, issued a preliminary injunction prohibiting the department from granting additional debt forgiveness under the Biden administration’s Saving on a Valuable Education (SAVE) plan.
The SAVE Plan offers more generous conditions than the previous income-based repayment strategies. It cuts monthly payments and allows individuals with original principal balances of $12,000 or less to have their debts forgiven after ten years.
Missouri Attorney General Andrew Bailey, a Republican who assisted in leading the litigation, praised Ross’s decision. “Congress never gave Biden the authority to saddle working Americans with half a trillion dollars of people’s debt,” he posted on his X (previous Twitter) handle.
The White House expressed significant disagreement with the findings and blasted Republican elected officials who have opposed student loan forgiveness. White House press secretary Karine Jean-Pierre stated, “Today’s rulings will not prevent our administration from using all available tools to provide student borrowers the relief they need.”
President Biden announced the SAVE Plan in 2022, along with a broad $430 billion initiative that would have fulfilled his campaign pledge by canceling up to $20,000 for up to 43 million Americans. The initiative was subsequently blocked by the conservative-majority United States Supreme Court in June 2023.
The SAVE Plan was scheduled to take full effect on July 1, but according to the Education Department, portions of it had already been implemented by 414,000 borrowers receiving $5.5 billion in debt forgiveness.
The White House has stated that the SAVE Plan could benefit more than 20 million borrowers. In May, the administration announced that $8 million had already joined, with 4.6 million having their monthly payments reduced to $0.
11 states opposed the proposal in a lawsuit filed in Kansas. Crabtree recently dismissed eight of the states’ cases but allowed South Carolina, Alaska, and Texas to proceed. Seven additional states filed suit in Missouri.
On Monday, neither judge ruled that any previous debt relief granted should be reversed. Crabtree said the Republican-led states waited long to sue, claiming they were permanently hurt by the SAVE Plan’s in-effects provisions.
However, Crabtree, who, like Ross, was appointed by former President Barack Obama, stated that the Higher Education Act of 1965 does not explicitly authorize the “unprecedented and dramatic expansion” of income-based repayment plans envisioned.
He referenced an estimate by a lawyer from the Republican-led states of South Carolina, Texas, and Alaska that the SAVE Plan would cost $475 billion over ten years.
Ross, ruling in favor of seven states led by Missouri, reached a similar result, stating that the department “overstepped its authority by promulgating a loan forgiveness provision as part of the SAVE program.”
