Biden’s $500 million student loan forgiveness plan struck down as federal appeals court delivers final blow.
Quick Takes
- U.S. 8th Circuit Court of Appeals ends Biden’s SAVE plan, ruling it exceeds Education Secretary’s authority
- Missouri AG Andrew Bailey leads successful lawsuit against the administration’s $500 million debt relief initiative
- Court’s decision prevents future presidents from implementing similar student loan forgiveness plans
- Ruling affects other income-driven repayment programs, potentially increasing monthly payments for millions
Court Delivers Final Blow to Biden’s Student Debt Relief Plan
The U.S. 8th Circuit Court of Appeals has put an end to former President Joe Biden’s ambitious student loan forgiveness plan, known as SAVE (Saving on a Valuable Education). The court ruled that the Secretary of Education exceeded his authority in designing the $500 million debt relief initiative. This decision not only halts the current proposal but also sets a precedent that could limit future presidential attempts at widespread student debt forgiveness.
Missouri Attorney General Andrew Bailey, who spearheaded the lawsuit against the Biden administration, hailed the court’s decision as a victory for working Americans. The ruling prevents the implementation of a plan that would have lowered monthly payments for over 8 million borrowers, with some qualifying for zero-dollar payments.
“Though Joe Biden is out of office, this precedent is imperative to ensuring a President cannot force working Americans to foot the bill for someone else’s Ivy League debt,” said Attorney General Bailey.
BREAKING: Court Rules Biden’s Student Debt Plan ILLEGAL!
A U.S. appeals court ruled that Biden had no authority to push his student debt relief plan, which aimed to lower payments and speed up loan forgiveness – Reuters pic.twitter.com/UTc0XpXWFS
— Libs of TikTok (@libsoftiktok) February 18, 2025
Implications for Future Debt Relief Efforts
The court’s decision extends beyond the SAVE plan, potentially affecting other income-driven repayment (IDR) programs. This broader impact raises questions about the statutory authority for widespread loan forgiveness and may force millions of borrowers to switch to less generous repayment options. The ruling suggests that the most generous features of these programs, which lower monthly payments and accelerate forgiveness, may face continued judicial scrutiny.
The Penn Wharton Budget Model estimated that the SAVE plan would have cost taxpayers $475 billion over the next decade. Critics, including Congressional Republicans, accused the Biden administration of using debt forgiveness as a tactic to gain votes before the 2024 election. The administration had previously canceled approximately $183.6 billion in student debt through various initiatives.
Legal Reasoning Behind the Decision
Judge L. Steven Grasz, in his ruling, emphasized that Congress has been explicit when authorizing loan forgiveness in the past. The court found that the Biden administration’s interpretation of its authority under existing laws, including a 2003 statute for veterans, was too broad when applied to those affected by COVID-19.
“We are hard-pressed to conclude that Congress, by directing the Secretary to enact a repayment plan with varying payments based on income over a period not exceeding twenty-five years, believed it authorized the Secretary to wipe out any remaining principal or interest of any borrower in as few as ten years of low or no payments,” wrote Judge Grasz, outlining the court’s opinion.
This ruling follows a similar decision by Supreme Court Chief Justice John Roberts, who previously struck down a $430 billion debt relief effort. The consistent legal pushback highlights the challenges faced by executive actions in addressing the student debt crisis without explicit congressional approval.
The Road Ahead for Student Borrowers
With the SAVE plan blocked, millions of borrowers may face higher monthly payments if forced to switch to less generous repayment options.
As the debate over student debt relief continues, Congress is considering proposals to repeal existing income-driven repayment plans and replace them with a system that eliminates loan forgiveness entirely. The 8th Circuit’s injunction has set the stage for a reevaluation of the executive branch’s role in student loan forgiveness, with potentially far-reaching consequences for current and future borrowers.
