Supreme Court rejects Biden administration’s request to reinstate multibillion-dollar student debt plan

August 28, 2024 6:03 p.m. • Last updated: August 28, 2024 6:03 p.m.

FILE – The Supreme Court is seen at sunset in Washington, Nov. 6, 2020. (AP Photo/J. Scott Applewhite, File)

Washington — The Supreme Court on Wednesday put on hold the Biden administration’s latest multibillion-dollar plan that would have cut payments for millions of borrowers, while lawsuits continue in lower courts.

The justices rejected an administration request to reinstate most of those provisions. That request was blocked by the U.S. Court of Appeals for the 8th Circuit.

In an unsigned order, the court said it expects the appeals court to issue a more complete decision on the plan “as soon as possible.”

The Education Department is seeking to speed up loan forgiveness and reduce monthly payments based on income from 10% to 5% of a borrower’s discretionary income. The plan also would not require borrowers to make payments if they earn less than 225% of the federal poverty level, or $32,800 a year for a single person.

Last year, the Supreme Court’s conservative majority rejected an earlier plan that would have erased more than $400 billion in student loan debt.

Estimates of the cost of the new SAVE plan vary. Republican-led states that oppose the plan estimate the cost at $475 billion over 10 years. The administration cites a Congressional Budget Office estimate of $276 billion.

Two separate lawsuits against the SAVE plan have been filed in federal courts. In June, judges in Kansas and Missouri issued separate rulings blocking much of the administration’s plan. Debts that had already been forgiven under the plan were not affected.

The U.S. Court of Appeals for the 10th Circuit issued a ruling allowing the department to enforce a provision allowing lower monthly payments. Republican-led states had asked the Supreme Court to overturn that decision.

But after the 8th Circuit blocked the entire plan, the states did not need the Supreme Court to intervene, the justices noted in a separate order issued Wednesday.

The Justice Department had suggested that the Supreme Court could take up the legal fight against the new plan, as it did with the previous debt forgiveness plan. But the justices declined to do so.

“This is a recipe for chaos in the student loan system,” said Mike Pierce, executive director of the Student Borrower Protection Center, an advocacy group.

“No court has ruled on the merits of this case, but despite all of this, borrowers are left in a legal limbo where their rights do not exist for them,” Pierce said.

Eight million people were already enrolled in the SAVE program when it was suspended by the trial court, and more than 10 million more are looking for ways to pay their monthly payments, he said.

Sheng Li, a trial lawyer with the New Civil Liberties Alliance, a legal group funded by conservative donors, welcomed the order. “There was no reason to lift the injunction because the Department of Education’s new loan forgiveness program is just as illegal as the one the court struck down a year ago,” he said in a statement.