WASHINGTON – The Supreme Court on Wednesday rejected a bid by the Biden administration to revive the latest plan to address federal student loan debt.
The court summarily rejected the administration’s emergency appeal to overturn the nationwide order imposed by the appeals court. There were no objections.
The order states that the appellate court, which is currently hearing the case, “must make its decision with appropriate dispatch.”
The Department of Education issued a regulation ending the Savings for Value Education, or SAVE, plan in July 2023. The Supreme Court has decided The administration did not have the authority to implement President Joe Biden’s previous loan forgiveness program.
The new effort, like the previous one, was opposed by many conservative-leaning states, led by Missouri.
“This court order reminds the Biden-Harris administration that Congress did not give them the authority to saddle working Americans with $500 billion in someone else’s Ivy League debt,” said Missouri Attorney General Andrew Bailey. “This is a huge victory for every American who still believes in paying their own way.”
A spokeswoman for the Department of Education said the administration will continue to reduce repayment options for borrowers.
“We are disappointed by this decision, particularly as lifting the ban would have allowed for reduced fees and other benefits for borrowers across the country,” the spokesman said. “The Department will seek to minimize further harm and disruption to borrowers as we await the Eighth Circuit’s final decision.”
The new proposal includes several provisions that limit the amount people must pay for undergraduate loans to 5% of their income. Previously, the limit was 10%.
Challengers said it would require up to $475 billion in spending not authorized by Congress. They say the Supreme Court should block it for the same reason it blocked Biden’s earlier plan.
Under the “fundamental questions” doctrine adopted by the Court’s conservative rulings, federal agencies cannot initiate new policies that have significant economic effects without express authorization from Congress.
The states argued in court filings that the Biden administration’s “assertion of unfettered authority to rescind every penny of every loan is staggering.”
Other provisions of the new plan would impose limits on accrued interest and shorten the repayment period for certain small loans, allowing them to be forgiven.
A federal judge in Missouri sued to block the plan in April, resulting in only an abbreviated repayment offer being postponed.
But in an Aug. 9 decision, the U.S. Court of Appeals for the 8th Circuit in St. Louis issued a more far-reaching ruling that put other provisions on hold.
In court filings, Attorney General Elizabeth Prelogar said the changes in payment amounts were allowed under a 1993 federal law that said the Education Department could determine an “appropriate portion” of revenue to calculate payment amounts and set payment periods.
He said the “extremely broad” appeals court ruling overturns the new plan and blocks previous changes to repayment terms from 1994, thereby “violating the established expectations of borrowers who have made payments for years and even decades.”
About 8 million people are already enrolled in the SAVE plan with other provisions previously in place that allow them to reduce their Payment amounts.
The plan has also been challenged in other courts, with judges blocking parts of it. But the 8th Circuit decision made those cases less relevant.
For this reason, the Supreme Court on Wednesday dismissed a separate petition filed by a different group of states challenging the plan.