The Biden administration Wednesday faced another setback to its efforts to ease the financial burden on millions of borrowers, as the Supreme Court declined a request to reinstate its latest federal student loan debt relief plan.
In a brief order, the top court refused to lift a nationwide injunction issued by an appeals court, which had blocked the plan from going into effect, NBC News reported. The order did not indicate any dissenting opinions from the justices. The Supreme Court said that the appeals court currently reviewing the case should issue its ruling swiftly.
The policy, known as the Saving on a Valuable Education (SAVE) plan, was finalized by the Education Department in July 2023. It came just a month after the Supreme Court ruled that the administration did not have the authority to implement President Joe Biden's earlier student loan forgiveness program.
The new effort faced challenges from several Republican-led states, led by Missouri.
Missouri Attorney General Andrew Bailey praised the Supreme Court's decision, stating, "This court order is a stark reminder to the Biden-Harris administration that Congress did not grant them the authority to saddle working Americans with $500 billion in someone else's Ivy League debt. This is a huge win for every American who still believes in paying their own way."
A spokesperson for the Education Department expressed disappointment with the Supreme Court's decision, adding that lifting the injunction would have enabled borrowers across the country to benefit from lower payments.
The department said it will continue to seek ways to minimize harm and disruption for borrowers as they await the final ruling from the Eighth Circuit Court of Appeals.
The SAVE plan includes several provisions aimed at easing the repayment process for borrowers, such as capping repayment amounts for undergraduate loans at 5% of income, down from the previous 10%. The plan also proposes limits on accrued interest and offers shorter repayment periods for certain small loans, after which they would be forgiven.
Critics argue that the plan requires spending up to $475 billion without Congressional authorization. They contend that, under the "major questions" doctrine, federal agencies need explicit Congressional approval for policies with significant economic impact.
Solicitor General Elizabeth Prelogar, in court documents, said that the 1993 federal law grants the Education Department the authority to determine the "appropriate portion" of income for calculating repayment amounts and setting timelines.
She also criticized the appeals court's injunction as overly broad and claimed it disrupts the expectations of borrowers who have been making payments for years under prior regulations.
