Supreme Court rejects Biden administration’s call to restore multibillion-dollar student debt repayment plan

WASHINGTON (AP) — The Supreme Court on Wednesday put a hold on the Biden administration’s latest multibillion-dollar plan that might cut payments for thousands and thousands of borrowers while lawsuits play out in lower courts.

The justices rejected the administration’s bid to reinstate most of them. It was blocked by the eighth 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 “in due course.”

The Education Department is working to provide a faster path to loan cancellation and reduce income-based monthly payments from 10% to 5% of a borrower’s discretionary income. The plan also won’t require borrowers to make payments in the event that they earn lower than 225% of the federal poverty level — $32,800 per yr for a single person.

Last yr, the conservative majority on the Supreme Court rejected an earlier plan that aimed to forgive greater than $400 billion in student loan debt.

Cost estimates for the brand new SAVE plan vary. Republican states difficult the plan estimate the fee at $475 billion over 10 years. The administration cites a Congressional Budget Office estimate of $276 billion.

Two separate legal challenges to the SAVE plan were working their way through federal courts. In June, judges in Kansas and Missouri issued separate rulings that blocked much of the administration’s plan. Debt that had already been forgiven under the plan was not affected.

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The tenth U.S. Circuit Court of Appeals issued a ruling that allowed the department to proceed with the availability allowing lower monthly payments. Republican-led states asked the Supreme Court to reverse the ruling.

But after the Eighth Circuit Court blocked your complete plan, states didn’t have to ask the Supreme Court to intervene, the justices noted in a separate order issued Wednesday.

The Justice Department has suggested the Supreme Court could take up a legal challenge to the brand new plan now, because it did with the sooner debt-relief plan. But the justices declined.

“It’s a recipe for chaos throughout the student loan system,” said Mike Pierce, executive director of the Student Borrower Protection Center, a student advocacy group.

“No court has yet ruled on the merits of the case, but borrowers are nonetheless left in a limbo where their rights do not apply,” Pierce said.

Eight million people were already enrolled within the SAVE program when it was halted by a lower court, and greater than 10 million persons are in search of ways to cover their monthly payments, he added.

Sheng Li, litigation counsel for the New Civil Liberties Alliance, a legal group funded by conservative donors, praised the order. “There was no basis to overturn the order because the Education Department’s latest loan cancellation program is as unlawful as the one the Court invalidated a year ago,” he said in an announcement.