Topline
Three Republican-led states have asked the Supreme Court to block President Joe Biden’s student loan plan that would limit payments and set forgiveness schedules for some borrowers, arguing it is “an unlawful debt cancellation program that … will cost the public hundreds of billions of dollars.”
Attorneys general in Alaska, South Carolina and Texas asked the country’s highest court to vacate a ... [+]
Key Facts
On June 24, two federal judges partially agreed with Republican-led states and partially blocked parts of the plan that were set to take effect July 1 while the litigation moves forward.
But after the administration appealed, the 10th Circuit Court of Appeals’ ruled on June 30 it could lower monthly student loan payments beginning in July as scheduled while the litigation is handled—which is what the three states are now asking the Supreme Court to vacate.
The 10th Circuit Court of Appeals’ ruling did not affect a different provision of the Saving on a Valuable Education, or SAVE, plan, which remains blocked and would allow loans originally $12,000 or less to be forgiven after 10 years instead of 20 or 25 years.
The states are also asking the Supreme Court to grant certiorari in advance of judgment “to minimize the significant and ongoing harm caused by Department’s unlawful actions,” meaning the Supreme Court would review the case before the lower court finalizes its judgments.
In a statement, South Carolina Attorney General Alan Wilson said the Supreme Court already ruled “the Biden administration doesn’t have the authority to waive hundreds of billions of student loan repayments, but President Biden is trying to go around that and do it anyway,” which he said would saddle taxpayers with “paying off billions of dollars of these students’ debts.”
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What Does The Save Plan Do?
The SAVE plan, which replaces the Revised Pay As You Earn plan, does three things: caps the repayment of undergraduate loans at 5% of a borrower’s discretionary income rather than 10%, redefines discretionary income as the difference between a borrower’s adjusted gross income and 225% of the poverty line, and provides a cancellation period as low as 10 years for individuals with original loan balances at or below $12,000. When announcing the plan, Biden described it as “the most affordable student loan plan ever.”
Key Background
The plan was launched last August as part of a push from the Biden administration to ease student loan payments after the Supreme Court blocked Biden’s previous attempt to cancel many loans altogether. The plan is a variation of an income-driven repayment plan, meaning it doesn’t immediately cancel debts but calculates monthly payments based on a borrower’s income and family size rather than loan balance, helping people get to loan forgiveness sooner. When announcing the plan, Biden estimated it could help about 30 million borrowers, and about 8 million have signed up. Republican critics of the plan, however, have argued it still exceeds Biden’s authority and have said it is just a way for Biden to sidestep the Supreme Court’s past ruling against his first plan.
