The Supreme Court at sunset in Washington, November 6, 2020.
J. Scott Applewhite/AP
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J. Scott Applewhite/AP
WASHINGTON (AP) — The Supreme Court on Wednesday put on hold the Biden administration’s latest multibillion-dollar plan to reduce payments for millions of borrowers while lawsuits are resolved in lower courts.
The justices rejected the administration’s request to reinstate much of the law, a request that was blocked by the 8th U.S. Circuit Court of Appeals.
In an unsigned order, the court said it expected the appeals court to issue a fuller decision on the plan “expeditiously.”
The Education Department is looking to provide a faster path to loan forgiveness and reduce income-based monthly repayments from 10% to 5% of a borrower’s discretionary income. The plan would also not require borrowers to make payments if they earn less than 225% of the federal poverty threshold—$32,800 a year for a single person.
Last year, the Supreme Court’s conservative majority rejected an earlier plan to cancel more than $400 billion in student loan debt.
Estimates of the cost of the new SAVE plan vary. Republican-led states opposing the plan estimate it would cost $475 billion over 10 years. The administration cites a Congressional Budget Office estimate of $276 billion.
Two separate legal challenges to the SAVE plan have been brought to federal court. 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 10th U.S. Circuit Court of Appeals ruled that the department could proceed with the provision allowing lower monthly payments. Republican-led states asked the high court to overturn that ruling.
But after the 8th Circuit Court of Appeals blocked the entire plan, the states do not need the Supreme Court to intervene, the justices noted in a separate order issued Wednesday.
The Justice Department has suggested that the Supreme Court could take up the legal battle over the new plan now, as it did with the previous debt-forgiveness plan. But the justices have declined to do so.
“This is a recipe for chaos for the entire student loan system,” said Mike Pierce, executive director of the Student Borrower Protection Center, an advocacy group.
“No court has decided on the merits of this case, but despite all that, borrowers are left in a precarious position where their rights are no longer available,” Pierce said.
Eight million people were enrolled in the SAVE program when it was halted by a lower court, and more than 10 million others are looking for ways to make monthly payments, he said.
