Supreme Court won't let Biden's student debt relief plan run while being challenged

WASHINGTON – The Supreme Court on Wednesday rejected the Biden administration’s request to allow a student debt relief plan to remain in effect while its legality is challenged by Republican-led states.

The plan, which lowers monthly payments and leads to faster debt forgiveness for some borrowers, was blocked by a federal appeals court this summer.

The St. Louis-based 8 ^th U.S. Circuit Court of Appeals said that the cost of the plan – expected to provide hundreds of billions of dollars in debt relief over the next ten years – is evidence that the Department of Education exceeded its authority in setting repayment terms.

The Biden administration’s lawyers argued it followed the law and the appeals court’s “extraordinary injunction has scrambled the department’s administration of loans for millions of borrowers,” creating “widespread confusion and uncertainty.”

Solicitor General Elizabeth Prelogar said the injunction is so broad it prevents the administration of previously-adopted repayment rules that aren’t being challenged.

States opposed to the new plan said there's no harm in keeping it on hold because borrowers are not required to pay principal or interest while the litigation continues.

The Supreme Court's brief denial of the administration's emergency request to lift the hold said the justices expect the appeals court will act quickly on the underlying challenge.

That could send the case back to the high court for a full consideration of the plan.

White House spokesperson Angelo Fernández Hernández said the administration "won’t stop fighting against Republican elected officials’ efforts to raise costs on millions of their own constituents’ student loan payments.”

Missouri Attorney General Andrew Bailey called the court's action "a huge win for every American who still believes in paying their own way."

President Joe Biden's first attempt to wipe out student loan debt for tens of millions Americans was struck down by the Supreme Court last year.

The new income-driven repayment program, known as Saving on a Valuable Education, or SAVE, would lower monthly payments for millions of Americans. It modifies how a borrower’s income is calculated and requires borrowers to pay 5% of that discretionary income toward undergraduate loans instead of 10%. Interest can’t be higher than the amount of the monthly payment. Borrowers who originally owed no more than $12,000 can have their debt forgiven after a decade.

The plan is being challenged by two groups of GOP-led states in different federal courts.

At the end of June, a federal judge in Kansas said put parts of the plan on hold in response to a suit by 11 states. But after the Biden administration appealed, the Denver-based 10 ^th U.S. Circuit Court of Appeals said most of the plan could be implemented during the ongoing litigation.

In a challenge by seven other states, the 8th Circuit this month barred the Education Department from “any further forgiveness of principal or interest, from not charging borrowers accrued interest, and from further implementing SAVE’s payment-threshold provisions.”

The department had granted $5.5 billion in relief to 414,000 borrowers before the SAVE Plan was put on hold.

The Congressional Budget Office has estimated the program would cost $230 billion over ten years. But challengers say an analysis by the Penn Wharton Budget Model puts the price tag at $475 billion.

This article originally appeared on USA TODAY: Supreme Court won't let Biden's student debt relief plan run while being challenged