States Challenge Biden’s SAVE Plan at Supreme Court

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Key Points​

• Three Republican-led states seek Supreme Court intervention to block Biden’s student loan plan.
• The 10th Circuit Court allowed part of the plan to proceed, prompting the appeal.
• The case affects millions of borrowers amid ongoing legal battles over student loan forgiveness.

Attorneys general from Alaska, South Carolina, and Texas have petitioned the Supreme Court to block President Joe Biden’s student loan repayment and forgiveness plan, known as the Saving on a Valuable Education (SAVE) plan.

The states argue that the plan is an “unlawful debt cancellation program” that could cost the public hundreds of billions of dollars. This legal action follows a series of judicial decisions that have left parts of the plan in a state of uncertainty.

Related: Lawsuit Against SAVE Plan Likely To Fail

Background And Legal Proceedings​

The SAVE plan, introduced by the Biden administration, aims to reduce monthly student loan payments and offer loan forgiveness for certain borrowers. Specifically, the plan would cut payments from 10% of discretionary income to 5% and allow loans originally $12,000 or less to be forgiven after ten years instead of twenty or twenty-five years.

On June 24, 2024, two federal judges partially agreed with the Republican-led states and blocked some aspects of the SAVE plan that were set to take effect on July 1.

However, following an appeal by the Biden administration, the 10th Circuit Court of Appeals ruled on June 30 that the administration could proceed with lowering monthly student loan payments starting in July while litigation continues.

This ruling did not affect the provision for early loan forgiveness, which remains blocked.

Argument And Appeal​

The states are seeking to vacate the 10th Circuit’s ruling, effectively halting the SAVE plan’s implementation. They argue that the plan exceeds the administration’s authority and imposes undue financial burdens on taxpayers.

South Carolina Attorney General Alan Wilson stated that the Supreme Court had previously ruled against such expansive executive authority to cancel student debt and criticized Biden for attempting to circumvent this ruling.

The emergency petition, filed on Monday, requests the Supreme Court to grant certiorari in advance of judgment, allowing the Court to review the case before the lower court finalizes its decisions. This expedited review is sought to minimize what the states describe as “significant and ongoing harm” caused by the Department of Education’s actions.

Impact On Borrowers​

Millions of student loan borrowers are caught in the middle of this legal battle, facing another round of uncertainty.

The 10th Circuit’s decision means that many borrowers could see their monthly payments reduced starting now, but broader debt forgiveness measures remain in limbo. The Biden administration has placed 3 million borrowers in administrative forbearance while the legal challenges proceed, providing temporary relief.

The challenge to the SAVE plan by Alaska, South Carolina, and Texas highlights the ongoing contention over President Biden’s efforts to provide student loan forgiveness.

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Editor: Colin Graves


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