President Joe Biden speaks about student loan debt at Madison College, April 8, 2024, in Madison, Wis. [AP Photo/Evan Vucci]
On July 18, the 8th US Circuit Court of Appeals, based in St Louis, granted an emergency motion for an administrative stay filed by the state of Missouri and six other Republican-led states against the Biden administration’s Saving on a Valuable Education (SAVE) plan, blocking it. The plan would have lowered monthly payments for some of the millions of Americans paying off student loans.
Republicans made an appeal to the Supreme Court to strike the plan altogether in Alaska v. Cardona, filed July 9 by three Republican-led states, Alaska, Texas and South Carolina. The case is on the Court’s “shadow docket” which contains emergency motions and other matters the court can decide on rapidly.
Student loan forgiveness is overwhelmingly popular, with 7 in 10 voters supporting action and 50 percent supporting partial or complete loan cancellation, according to a March 2024 poll by research and consulting firm SocialSphere, which was released by Protect Borrowers Action, an advocacy group.
This court action follows a ruling last month by US District Judge John A. Ross in St Louis that partially blocked the US Department of Education from granting any further loan forgiveness under SAVE.
SAVE was announced in 2022 by Biden alongside a broader $430 billion plan, which would have canceled up to $20,000 in debt for up to 43 million borrowers. The latter was blocked by the US Supreme Court in June 2023 in Biden v. Nebraska after facing a number of challenges by right-wing federal courts.
The SAVE plan has already been partially implemented, with eight million enrolled and 4.5 million of those enrolled having had monthly payments eliminated. The Education Department said it had already granted $5.5 billion to 414,000 borrowers. This calculates to about 0.3 percent of the $1.75 trillion in student debt. According to the White House’s estimates, the plan could benefit over 20 million borrowers.
SAVE would allow those who originally borrowed less than $12,000 and have been paying for at least 10 years to cancel remaining student debt. Debtors are required to pay at a rate of at least 10 percent of their “discretionary” income under current plans, with SAVE reducing it to 5 percent in order to cancel their remaining student debt balance. The discretionary income is defined as household income minus 150 percent of the federal poverty guidelines for family size and location.
Those with incomes of less than $32,800, or less than $67,500 for a household of four, would be exempt from loan payments. The program is a somewhat more generous re-hash of a previous program, REPAYE, that forgives a borrower’s balance after 20 or 25 years of payments.
