A federal appeals court on Thursday blocked President Joe Biden's administration from advancing a new student debt relief initiative aimed at reducing monthly payments for millions of Americans.
The 8th U.S. Circuit Court of Appeals, based in St. Louis, granted the request of seven Republican-led states to suspend parts of the U.S. Department of Education's debt relief plan, which had not been previously blocked by a lower court, Reuters reported.
The ruling came the same day that the Biden administration announced another round of student loan forgiveness, this time totaling $1.2 billion in forgiveness for roughly 35,000 borrowers who are eligible for the Public Service Loan Forgiveness program.
Last month, U.S. District Judge John Ross in St. Louis prevented the Department from offering further loan forgiveness under the administration's Saving on a Valuable Education (SAVE) Plan.
However, he did not block the entire plan. The SAVE Plan offers more favorable terms than previous income-based repayment schemes, reducing monthly payments for eligible borrowers and forgiving debt after 10 years for those with original balances of $12,000 or less.
Following this, state attorneys general, spearheaded by Missouri Attorney General Andrew Bailey, petitioned the 8th Circuit to block the remaining aspects of the SAVE Plan.
The court complied, issuing an administrative stay through a one-page order. Bailey praised the latest ruling on the social platform X, calling it a "huge win for every American who still believes in paying their own way" and criticized the plan for potentially burdening working Americans with substantial debt.
Introduced by Biden in 2022, the SAVE Plan was part of a broader $430 billion initiative aimed at fulfilling a campaign promise to cancel up to $20,000 in debt for 43 million Americans. The program was blocked by the Supreme Court in June 2023.
The SAVE Plan was scheduled to be fully operational by July 1, though some parts of it have already been implemented.
According to the White House, over 20 million borrowers could benefit from the plan, with the Education Department saying that 8 million are currently enrolled and 4.5 million have had their monthly payments reduced to zero.
As of Thursday, the Department reported that $5.5 billion had been granted to 414,000 borrowers through the SAVE Plan.
The administration estimated the plan's cost to taxpayers at around $156 billion over 10 years, whereas Republican state attorneys general argued the actual cost would be closer to $475 billion.
