- A federal appeals court blocked former President Biden’s student loan forgiveness plan, known as the SAVE Repayment Plan. The court ruled that the education secretary exceeded their authority by designing a plan that forgave loans.
- Missouri Attorney General Andrew Bailey called the decision a significant precedent, ensuring future presidents cannot “force working Americans to foot the bill for someone else’s Ivy League debt.”
- According to higher education research group The Institute for College Access and Success, the court’s ruling could force borrowers to make higher monthly payments than they’re currently responsible for.
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A federal appeals court on Tuesday, Feb. 18, blocked former President Joe Biden’s student loan forgiveness plan, known as the SAVE Repayment Plan. The plan could have lowered monthly payments for student loan borrowers while placing them on an income-driven repayment plan.
Under SAVE, the government would have also paid for any monthly accrued interest left over after a full monthly payment was made.
Seven Republican states filed a lawsuit against the plan.
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Tuesday, a three-judge panel for the 8th U.S. Circuit Court of Appeals ruled Biden’s secretary of education had exceeded their authority “by designing a plan where loans are largely forgiven rather than repaid.”
The ruling states that the education secretary has the power from Congress to create repayment plans in which the loans are repaid but not forgiven.
Missouri Attorney General Andrew Bailey, who led the litigation, said on X that while the ruling doesn’t change the fact President Donald Trump wouldn’t follow through with the program, the ruling sets an important benchmark for future administrations.
Bailey added, “This precedent is imperative to ensuring a president cannot force working Americans to foot the bill for someone else’s Ivy League debt. Huge win.”
The Institute for College Access and Success (TICAS) argues that the court’s ruling could pave the way for a student loan overhaul that would increase borrowers’ monthly payments by as much as $200, on average. The group points to a piece of legislation written in January 2024 by Rep. Virginia Foxx, R-N.C., who served as the chair of the House Committee on Education and Workforce.
According to TICAS, Foxx’s bill would “make student loan repayment more expensive for millions of borrowers, limit access to federal student loans, and roll back regulations intended to hold institutions accountable for how well they serve students.”
According to the University of Pennsylvania’s Penn Wharton Budget Model analysis, the SAVE plan was estimated to cost taxpayers as much as $475 billion over a decade.
In 2023, the U.S. Supreme Court ruled 6-3, blocking Biden’s previous student loan forgiveness plan that would have canceled upwards of $400 billion in student loans for nearly 43 million Americans.
