US appeals court blocks all of Biden student debt relief plan

By Nate Raymond

(Reuters) -A federal appeals court on Thursday blocked President Joe Biden's administration from continuing to implement a new student debt relief plan designed to lower monthly payments for millions of Americans.

The St. Louis-based 8th U.S. Circuit Court of Appeals granted a request by seven Republican-led states to put on hold parts of the U.S. Department of Education's debt relief plan that had not already been blocked by a lower-court judge.

That ruling last month by U.S. District Judge John Ross in St. Louis had blocked the department from granting further loan forgiveness under the administration's Saving on a Valuable Education (SAVE) Plan but had not blocked all of the plan.

That plan provides more generous terms than past income-based repayment plans, lowering monthly payments for eligible borrowers and allowing those whose original principal balances were $12,000 or less to have their debt forgiven after 10 years.

State attorneys general led by Missouri Attorney General Andrew Bailey subsequently last week asked the 8th Circuit to block the rest of the SAVE Plan. The court did so through a one-page order granting an administrative stay.

Bailey on the social platform X hailed the ruling as a "huge win for every American who still believes in paying their own way." He said the student loan plan "would have saddled working Americans with half-a-trillion dollars in Ivy League debt."

An Education Department spokesperson said it was assessing the ruling's impact, would be in touch with any borrowers directly affected by it and "will continue to aggressively defend the SAVE Plan."

Biden, a Democrat, announced the SAVE Plan in 2022, alongside a broader $430 billion program that would have fulfilled a campaign promise by cancelling up to $20,000 in debt for up to 43 million Americans. It was ultimately blocked by the conservative-majority U.S. Supreme Court in June 2023.

The SAVE Plan was slated to fully take effect on July 1, though parts of it have already been implemented.

The White House has said that over 20 million borrowers could benefit from the SAVE Plan. The Education Department says that 8 million are already enrolled, including 4.5 million whose monthly payments have been reduced to $0.

The Education Department on Thursday said it had already granted $5.5 billion to 414,000 borrowers through the SAVE Plan.

The administration estimated that the plan would cost taxpayers around $156 billion over 10 years, but Republican state attorneys general argue that its actual cost totaled around $475 billion.

Another federal judge in Kansas had also blocked parts of the SAVE Plan last month, though a different federal appeals court, the Denver-based 10th U.S. Circuit Court of Appeals, put part of that decision on hold. A group of Republican-led states have asked the U.S. Supreme Court to reinstate that injunction.

(Reporting by Nate Raymond in BostonEditing by Sandra Maler and Diane Craft)