Federal Appeals Court Blocks Full Implementation of SAVE Plan

A federal appeals court has temporarily halted the complete execution of the Biden administration's SAVE student debt relief plan, responding to an emergency motion from seven Republican-led states.

The decision is part of ongoing legal challenges aiming to reduce student loan payments and forgive certain debts.

8th U.S. Circuit Court of Appeals Issues Order

On July 18, the 8th U.S. Circuit Court of Appeals issued an order to block all active parts of the SAVE plan that were not already obstructed by a previous lower-court ruling. This move follows a request led by Missouri and backed by six other Republican-led states.

Initially, U.S. District Judge John Ross blocked parts of the SAVE plan but did not halt the entire program. In response, the White House announced plans to appeal Judge Ross's partial block of the plan.

Missouri Attorney General Andrew Bailey spearheaded the charge to freeze the entire program through the appeals court. The court granted an emergency motion, temporarily halting the SAVE debt relief plan until a decision on a longer-term injunction is made.

Education Department's Response

The Education Department had not responded to a comment request by the time of reporting. An Education Department spokesperson had previously stated that the SAVE plan was an effort to "fix a broken student loan system."

The spokesperson emphasized that the SAVE plan was part of creating the most beneficial student loan repayment plan to lower payments, protect from high interest rates, and accelerate debt forgiveness.

The same spokesperson added, "The Biden-Harris Administration won’t stop fighting to provide support and relief to borrowers across the country—no matter how many times Republican elected officials try to stop us."

Background on the SAVE Plan

The SAVE plan was part of a broader effort by the Biden administration to address issues within the student loan system. President Joe Biden had previously announced debt forgiveness under a different plan, the Public Service Loan Forgiveness Program, which forgave $1.2 billion for 35,000 borrowers.

The SAVE plan was developed after a 2023 Supreme Court decision blocked a more extensive debt cancellation plan proposed by President Biden. The regulations for the SAVE plan were to fully commence on July 1, but some benefits were accelerated by the administration in January.

Legal challenges to the SAVE Plan argued that it was implemented without Congressional approval and exceeded the Education Department's authority. Missouri Attorney General Andrew Bailey commented, "This is a huge win for every American who still believes in paying their own way," criticizing the plan for potentially saddling Americans with significant debt.

Legal Challenges and Future Steps

A separate lawsuit regarding the SAVE plan's legality is set to be evaluated by the U.S. Supreme Court. The Education Department had previously stated that Congress gave it the authority in 1993 to define terms of income-driven repayment plans, marking the SAVE plan as the fourth instance of utilizing this authority.

The SAVE plan aimed to provide significant relief to borrowers, with benefits such as lowered payments, protection from high interest rates, and accelerated debt forgiveness. However, the plan has faced substantial opposition, primarily from Republican-led states.

As the legal battles continue, the future of the SAVE plan remains uncertain. The Biden administration has vowed to keep fighting for student debt relief, despite the legal hurdles.

Conclusion

The federal appeals court's decision to temporarily halt the SAVE student debt relief plan marks a significant moment in the ongoing legal battles surrounding student loan forgiveness. Led by Missouri, seven Republican-led states successfully argued for the full implementation halt, citing concerns over the plan's legality and potential financial burden on Americans. The Biden administration, committed to addressing the student loan crisis, plans to appeal the decision. Meanwhile, the legal challenges will continue, with the U.S. Supreme Court set to evaluate the plan's legality.

The SAVE plan, developed after a Supreme Court decision blocked a broader debt cancellation proposal, is part of a larger effort to reform the student loan system. With substantial opposition and ongoing legal challenges, the future of the SAVE plan is uncertain. The Education Department remains steadfast in its mission to provide relief to borrowers, emphasizing the plan's potential benefits. The coming months will be crucial in determining the fate of the SAVE plan and its impact on millions of American borrowers.