US appeals court expands block on Biden Administration student loan forgiveness News
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US appeals court expands block on Biden Administration student loan forgiveness

A US federal appeals court on Friday blocked the Biden Administration from implementing its student loan forgiveness plan known as “SAVE.” The decision expands a previous appellate court order that prevented a portion of the program from taking effect.

In the updated ruling, a three-judge panel of the US Court of Appeals for the Eighth Circuit issued a sweeping injunction that “enjoined [the Department of Education] from any further forgiveness of principal or interest, from not charging borrowers accrued interest, and from further implementing SAVE’s payment threshold provisions.” Borrowers who enrolled in SAVE will continue to have their payments paused as the litigation plays out.

A group of Republican-controlled states led by Missouri sued Biden and Education Secretary Miguel Cardona alleging the SAVE plan is an unlawful exercise of executive power. The threshold question before the court involved whether Congress, via the Higher Education Act (HEA), had authorized the Department of Education to establish monthly payment caps based on income while forgiving loan balances after a period of ten years.

In support of the injunction, the court stated:

The Government’s interpretation of [the HEA] provision to authorize loan forgiveness of this magnitude is questionable, especially in light of the fact that other portions of the HEA explicitly permit loan forgiveness… the clear statutory requirement that loans in certain programs be canceled, coupled with statutory silence regarding [other] forgiveness… suggests that Congress made it clear under what circumstances loan forgiveness is permitted and [the SAVE plan] is not one of those circumstances.

Federal courts have struggled to produce uniform rulings regarding several loan forgiveness plans. In 2022, a federal judge dismissed a challenge to SAVE, holding that a group of states including Missouri did not suffer harm as a result of the program. Meanwhile, the US Supreme Court last year rejected the authority of the administration to cancel student loans in their entirety, ruling in Biden v. Nebraska that federal law “does not authorize the loan cancellation plan.”

The SAVE plan’s provisions were scheduled to take effect last month. Despite the outcome, the Biden Administration continues to oppose the injunction and will pursue an additional slate of appeals.

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