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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe Supreme Court on Wednesday kept on hold the latest multibillion-dollar plan from the Biden administration that would have lowered payments for millions of borrowers, while lawsuits make their way through lower courts.
The justices rejected an administration request to put most of it back into effect. It was blocked by the 8th U.S. Circuit Court of Appeals.
In an unsigned order, the court said it expects the appeals court to issue a fuller decision on the plan “with appropriate dispatch.”
The Education Department is seeking to provide a faster path to loan cancellation, and reduce monthly income-based repayments from 10% to 5% of a borrower’s discretionary income. The plan also wouldn’t require borrowers to make payments if they earn less than 225% of the federal poverty line — $32,800 a year for a single person.
Last year, the Supreme Court’s conservative majority rejected an earlier plan that would have wiped away more than $400 billion in student loan debt.
Cost estimates of the new SAVE plan vary. The Republican-led states challenging the plan peg the cost at $475 billion over 10 years. The administration cites a Congressional Budget Office estimate of $276 billion.
Two separate legal challenges to the SAVE plan have been making their way through federal courts. In June, judges in Kansas and Missouri issued separate rulings that blocked much of the administration’s plan. Debt that already had been forgiven under the plan was unaffected.
The 10th U.S. Circuit Court of Appeals issued a ruling that allowed the department to proceed with a provision allowing for lower monthly payments. Republican-led states had asked the high court to undo that ruling.
But after the 8th Circuit blocked the entire plan, the states had no need for the Supreme Court to intervene, the justices noted in a separate order issued Wednesday.
The Justice Department had suggested the Supreme Court could take up the legal fight over the new plan now, as it did with the earlier debt forgiveness plan. But the justices declined to do so.
“This is a recipe for chaos across the student loan system,” said Mike Pierce, executive director of the Student Borrower Protection Center, an advocacy group.
“No court has decided on the merits here, but despite all of that borrowers are left in this limbo state where their rights don’t exist for them,” Pierce said.
Eight million people were already enrolled in the SAVE program when it was paused by the lower court, and more than 10 million more people are looking for ways to afford monthly payments, he said.
Sheng Li, litigation counsel with the New Civil Liberties Alliance, a legal group funded by conservative donors, applauded the order. “There was no basis to lift the injunction because the Department of Education’s newest loan-cancellation program is just as unlawful as the one the Court struck down a year ago,” he said in a statement.
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Correct answer. A debt is a debt and should be paid and not transferred to me.
Trump filed bankruptcy 6 times to avoid paying debt. Plus Trump has a history of stiffing contractors and anyone else he owes money.
Any debt except taxes and student debt owed to the federal government can be dismissed via bankruptcy.
Mark B, what does Trump filing for bankruptcy have to do with the Supreme Court ruling? Let me also point out that approximately 450,000 Americans file for bankruptcy every year, a process governed by Federal law, much like the tax code. Regarding the Supreme Court ruling, Congress is responsible for passing any spending measures. The President does not, and has never had, the authority to spend without Congressional approval.
All student loan debts should be forgiven. This will give Kamala Harris a bit of a boost in the election. Plus, the forgiven debt should not be taxable unless the student votes for Trump.
“This is a recipe for chaos across the student loan system” – Good!! The value of a college education is overblown. The ROI for most degrees isn’t there yet tuition prices continue to rise. Until the government stops handing out “free” money to 18 y/o this problem won’t go away. Maybe colleges should loan there endowment funds to students and keep everything in house.
You are agreeing with both sides of the issue here. I agree the value of a college education is overblown. But no one is holding a gun to student’s heads making them take out loans for degrees they aren’t ambitious enough to utilize.
And it would only take $16/hour to be above the income level to make loan payments required. People could make that at McDonalds! They could get a second job to pay their loans.
If they signed for the loans they need to repay them. If I signed for a mortgage and didn’t make the payment I wouldn’t get to keep the house because I couldn’t make the payments.
JM R. I agree but the analogy you provided is different. A mortgage lender would never give a loan to an 18 y/o with little to no credit, little work experience, or no assets as collateral. Yet the government continues to hand out student loans like candy. I know because I went to college, ate the candy, and slowly off my loans. That included $$$ from my parents help for first 2 years.