Courts block aspects of Biden’s hallmark student loan repayment plan

Courts block aspects of Biden’s hallmark student loan repayment plan

The rulings will stop the Biden administration from any further implementation.

ByCheyenne Haslett

June 24, 2024, 11:44 PM

In two court rulings Monday night, federal judges in Kansas and Missouri halted key aspects of President Joe Biden's sweeping student loan repayment program.

The SAVE plan, a student loan repayment plan that ties how much someone pays each month to what their income is, has been in place for almost a year and is the jewel of Biden's surviving student loan efforts -- one that he has touted heavily in his re-election campaign.

The rulings Monday will stop the Biden administration from any further implementation of the program -- in which 8 million are enrolled -- but allow people who are enrolled to keep using SAVE as is until the cases are fully litigated.

That means phase two of SAVE, which would've reduced monthly payments from 10% of a borrower's discretionary income down to 5%, is on pause, as is any further cancellation of debt for people who took out smaller initial loan payments and have been paying for 10-plus years.

SAVE is similar to other income-driven repayment plans, which have been used for decades but are more generous because of lower monthly payments -- people who make a minimum wage can pay as little as $0 a month -- as well as a shorter path to debt relief.

U.S. President Joe Biden speaks during an event in Madison, Wisconsin, on Monday, April 8, 2024. (PHOTO: Daniel Steinle/Bloomberg via Getty Images)Bloomberg via Getty Images

Through SAVE so far, Biden has canceled $5.5 billion in debt for almost 414,000 borrowers.

The lawsuits were brought by Republican states who argued that the Biden administration lacked authority from Congress to enact the SAVE plan -- the same states that fought to overturn Biden's initial debt relief plan last year.

The Department of Education and the White House vowed to fight the rulings.

"We strongly disagree with the Kansas and Missouri District Court rulings, which block components of the SAVE Plan that help student loan borrowers have affordable monthly payments and stay out of default. The Department of Justice will continue to vigorously defend the SAVE Plan," Education Secretary Miguel Cardona said in a statement late Monday night.

White House Press Secretary Karine Jean-Pierre called out Republicans for depriving their constituents of lower student debt payments.

"It's unfortunate that Republican elected officials and their allies have fought tooth and nail to prevent their constituents from accessing lower payments and a faster path to debt forgiveness — and that courts are now rejecting authority that the Department has applied repeatedly for decades to improve income-driven repayment plans," she said.

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