2024-08-10 01:35:38
By Nate Raymond
WASHINGTON (Reuters) – A federal appeals court on Friday extended an order barring President Joe Biden’s administration from further implementing a student debt relief program that seeks to lower monthly payments for millions of borrowers and speed up loan forgiveness for some.
The 8th U.S. Circuit Court of Appeals in St. Louis largely granted an injunction as it considers an appeal by seven Republican-led states of a lower court order that they said did not go far enough to block the U.S. Education Department’s debt-relief program.
U.S. Education Secretary Miguel Cardona said the Biden administration strongly disagrees with the court’s ruling. “If this ruling is upheld, millions of borrowers will be forced to pay hundreds of dollars more per month,” Cardona said.
At the urging of those states, the court previously issued an order on July 18 temporarily blocking the government from implementing parts of the Savings for Valuable Education (SAVE) program that had not yet been banned by a Missouri judge.
The court’s order Friday was forward-looking, as the three-judge panel said Republican-led states “cannot go back on any loans that have already been forgiven.” The three judges — Raymond Grund, Ralph Erickson and L. Steven Glass — were all appointed by Republican presidents.
Missouri Attorney General Andrew Bailey, a Republican, welcomed the ruling in a social media post. Missouri is the lead plaintiff in the case.
“The Eighth Circuit upheld the court order we obtained, blocking the Biden/Harris plan to illegally cancel $500 billion in student loans,” Bailey said. “This is a huge win for every American who is no longer saddled with someone else’s Ivy League debt.”
The Republican-led states argued in a lawsuit filed in April that the Biden administration’s U.S. Department of Education exceeded its statutory authority by developing the student debt relief program.
The administration’s plan offers more lenient terms than past income-based repayment plans, lowers monthly payments for eligible borrowers and allows those with original principal balances of $12,000 or less to have their debt forgiven after 10 years.
The government opposed the states’ request, saying they wanted an “extraordinary” injunction that would increase monthly payments for millions of borrowers and halt any relief, even under a provision they did not challenge in the trial court.
In June, U.S. District Judge John Ross in St. Louis barred the government from continuing to provide debt relief on some small loans for just 10 years, compared with previous rules that set a limit of 20 or 25 years.
The SAVE lawsuits follow lawsuits filed by Republican-led states against a broader $430 billion plan championed by Democrat Joe Biden that would fulfill his campaign promise to cancel up to $20,000 in debt for as many as 43 million Americans.
The plan was ultimately blocked by the conservative-majority U.S. Supreme Court in June 2023.
The SAVE plan was originally scheduled to take full effect on July 1, and some of its contents have already been implemented.
The White House said more than 20 million borrowers could benefit from the SAVE program, and the Education Department said 8 million people have enrolled in the program, with 4.5 million seeing their monthly payments drop to $0.
The U.S. Department of Education said Thursday that it has disbursed $5.5 billion in loans to 414,000 borrowers through the SAVE program.
The administration estimated the plan would cost taxpayers about $156 billion over 10 years, but Republican state attorneys general argued its actual cost totaled about $475 billion.
Another federal judge in Kansas also blocked parts of the SAVE program, but another federal appeals court, the 10th U.S. Circuit Court of Appeals in Denver, stayed parts of that decision. Some Republican-led states have asked the U.S. Supreme Court to reinstate the ban.
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