Federal court extends block on Biden's student debt relief plan

[August 10, 2024]  By Nate Raymond

WASHINGTON (Reuters) -A federal appeals court on Friday extended an order blocking President Joe Biden's administration from further implementing a student debt relief plan designed to lower monthly payments for millions of borrowers and speed up loan forgiveness for some.

The St. Louis-based 8th U.S. Circuit Court of Appeals largely granted an injunction pending an appeal requested by seven Republican-led states of a lower-court order that they said did not go far enough in blocking the U.S. Department of Education's debt relief plan.

U.S. Secretary of Education Miguel Cardona said the Biden administration strongly disagreed with the court's decision. "If allowed to stand, this ruling would force millions of borrowers to pay hundreds of dollars more each month," Cardona said.

The court previously at the urging of those states had on July 18 issued an order that temporarily blocked the administration from implementing parts of Saving on a Valuable Education (SAVE) Plan that a Missouri judge had not already enjoined.

The court's Friday order was prospective, as the three-judge panel said the Republican-led states "cannot turn back the clock on any loans that have already been forgiven." The three judges -- Raymond Gruender, Ralph Erickson and L. Steven Grasz -- were all appointed by Republican presidents.

Missouri Attorney General Andrew Bailey, a Republican, hailed the ruling in a social media post. Missouri was the lead plaintiff in the case.

"The Eighth Circuit has upheld the court order we obtained to BLOCK the illegal Biden/Harris half-a-TRILLION dollar student loan cancellation scheme," Bailey said. "A massive win for every American who won’t be saddled with someone else’s Ivy League debt."

The Republican-led states argued in their lawsuit filed in April that the Biden administration's U.S. Education Department had exceeded its legal authority by enacting the student debt relief plan.

The administration's plan provides more generous terms than past income-based repayment plans, lowering monthly payments for eligible borrowers and allowing those whose original principal balances were $12,000 or less to have their debt forgiven after 10 years.

The administration had opposed the states' request, saying they wanted an "extraordinary" injunction that would increase the monthly payments for millions of borrowers and stop any forgiveness even under regulations they had not challenged at the trial court level.

U.S. President Joe Biden delivers remarks to commemorate the 60th anniversary of the signing of the Civil Rights Act at the LBJ Presidential Library in Austin, Texas, U.S., July 29, 2024. REUTERS/Kaylee Greenlee Beal/File photo

U.S. District Judge John Ross in St. Louis had in June blocked the administration from continuing to provide debt forgiveness for some smaller loans in as few as 10 years, compared to the 20- or 25-year timeline earlier rules provided.

Litigation over the SAVE Plan followed earlier court challenges by Republican-led states to a broader, $430 billion program championed by Biden, a Democrat, that would have fulfilled a campaign promise by cancelling up to $20,000 in debt for up to 43 million Americans.

That plan was ultimately blocked by the conservative-majority U.S. Supreme Court in June 2023.

The SAVE Plan was slated to fully take effect on July 1, though parts of it have already been implemented.

The White House has said that over 20 million borrowers could benefit from the SAVE Plan. The Education Department says that 8 million are already enrolled, including 4.5 million whose monthly payments have been reduced to $0.

The Education Department on Thursday said it had already granted $5.5 billion to 414,000 borrowers through the SAVE Plan.

The administration estimated that the plan would cost taxpayers around $156 billion over 10 years, but Republican state attorneys general argue that its actual cost totaled around $475 billion.

Another federal judge in Kansas had also blocked parts of the SAVE Plan, though a different federal appeals court, the Denver-based 10th U.S. Circuit Court of Appeals, put part of that decision on hold. A group of Republican-led states have asked the U.S. Supreme Court to reinstate that injunction.

(Reporting by Nate Raymond in Boston; additonal reporting by Kanishka Singh; Editing by Leslie Adler and Diane Craft and Miral Fahmy)

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