Supreme Court puts Biden’s student loan plan on hold

WASHINGTON —

The Supreme Court on Wednesday put on hold a plan by President Biden to reduce monthly student loan payments for millions of borrowers and cancel the loans after 20 years of repayment.

In a brief, unopposed order, the justices rejected an emergency appeal from the administration and said they would await a new ruling from a U.S. appeals court in St. Louis, which has blocked Biden’s plan from taking effect.

“The court expects the appellate court to render its decision with appropriate dispatch,” the order said.

The decision is at least a temporary setback for the administration, and suggests that conservatives on the court remain skeptical of Biden’s claim that the president has the power to reduce hundreds of billions of dollars in outstanding student debt.

Republican attorneys general from Missouri and 10 other states have sued to block Biden’s latest plan, arguing it is prohibitively expensive and goes beyond what the law allows.

In June, district judges in Kansas and Missouri ruled in their favor. In early August, the 8th Circuit Court in St. Louis issued a nationwide order barring the education secretary from taking further action to “cancel approximately $475 billion in federal student loan debt.”

Two weeks ago, Solicitor General Elizabeth Prelogar urged the High Court to lift the order or reduce its scope.

She said policies adopted by the Department of Education adjust a borrower’s payments based on income and allow loans to be forgiven after 20 years. She added that these provisions have been part of higher education law for decades.

But the judges preferred to leave the national order in place for the moment.

Last year, the Supreme Court rejected, by a vote of 6-3, Biden’s plan to cancel millions of student loans in response to the COVID-19 pandemic.

The administration relied on a law passed during the Iraq War that allowed education officials to “waive or modify” loans for people affected by war or a national emergency.

The justices said Congress failed to authorize a “massive debt cancellation program,” a program that was expected to cost the government $430 billion.

Disappointed but undeterred, Biden said he would explore other education legislation that would allow him to reduce or cancel outstanding loans for struggling borrowers.

In April, the White House announced a new round of student debt relief plans that would save about 30 million borrowers billions of dollars in total.

One of those programs, called SAVE, would reduce the monthly payments of 8 million borrowers, leaving 4.5 million with a monthly payment of $0. The cost to the government was originally projected to be about $180 billion, but the total has since grown as tens of thousands more loans were included.

Although the revised plan reduced payments rather than canceling loans, it would have cost the government even more because it would have extended aid to many more borrowers.

“The Supreme Court tried to stop me from relieving student debt. But they didn’t stop me,” Biden said at a rally in May. “I’ve relieved student debt for over 5 million Americans. I’m going to keep going.”

A coalition of 11 Republican prosecutors filed a lawsuit accusing Biden of further overstepping his authority. And in late June, federal judges in Kansas and Missouri, both Obama appointees, blocked parts of the Education Department’s new programs.

“The SAVE plan is a transformative expansion of regulatory authority” and would cost the government $475 billion over 10 years, U.S. District Judge Daniel Crabtree in Kansas City said.