Supreme Court won't reinstate Biden's loan repayment program

The Supreme Court denied a request on Wednesday to reinstate the Biden administration's popular student loan repayment program, leaving 8 million borrowers in limbo and dealing another blow to President Joe Biden's debt relief efforts.

A pair of federal judges in Kansas and Missouri halted key parts of the SAVE Plan in June after Republican-led states filed lawsuits challenging the program. But some provisions, such as lower monthly payments, were still available to borrowers. Then in July, the 8th Circuit Court of Appeals blocked the entire plan .

“The Court expects that the Court of Appeals will render its decision with appropriate dispatch,” the Supreme Court said in an unsigned order, in declining to take up the Missouri case.

In a second order issued on Wednesday , the justices also tossed out a request from a different group of states seeking to overturn an emergency ruling from the 10th Circuit Court of Appeals that briefly allowed parts of the plan to remain in place. The brief order pointed to a letter from lawyers for the states indicating that they did not need the Supreme Court to intervene because of the sweeping block from the 8th Circuit Court of Appeals.

Last year, the Supreme Court rejected an earlier plan that would have eliminated more than $400 billion in student loan debt.

The arguments: The Biden adminstration had asked the high court to vacate the 8th Circuit injunction, arguing that it was “overbroad.” The plaintiffs allege that the plan will cause financial harm to student loan servicer MOHELA because it would mean a loss of business.

“The injunction blocks implementation of the rule for every borrower in the Nation — including millions who have no relationship to MOHELA,” Justice Department lawyers wrote in their application to vacate the injunction.

Department of Justice lawyers also argued that under the Higher Education Act the Education Department has statutory authority to set the parameters of income-contingent repayment plans, and has had that authority for three decades.

The Republican-led states countered that the Biden administration would need approval from Congress to implement the program, citing a Nebraska Supreme Court case that struck down Biden’s student loan forgiveness program.

They have also suggested that the program would be expensive, costing $475 billion. The Congressional Budget Office estimated the cost of the federal student loan program would rise by about $230 billion under the SAVE Plan over the 2023–2033 period.

The Education Department did not immediately respond to a request for comment.

What's next: The cases will continue to make their way through the appeals courts, which will eventually rule on whether the program can stand.