Biden’s ambitious $500 million student loan forgiveness plan crumbles under legal scrutiny, leaving millions of borrowers in financial limbo.
Quick Takes
- The U.S. 8th Circuit Court of Appeals struck down Biden’s SAVE plan, ruling it exceeded the Education Secretary’s authority.
- Missouri Attorney General Andrew Bailey led the legal challenge, emphasizing the importance of preventing presidential overreach.
- The court’s decision sets a precedent that could restrict future presidents from implementing similar student debt relief plans.
- Millions of borrowers may face higher monthly payments if forced to switch to less generous repayment options.
- The ruling is part of a broader debate over student debt relief, with significant political implications.
Court Deals Blow to Biden’s Student Loan Forgiveness Ambitions
In a significant blow to the Biden administration, the U.S. 8th Circuit Court of Appeals has decisively ended the former president’s $500 million student loan forgiveness plan. The court ruled that the Secretary of Education exceeded his authority in designing the Saving on a Valuable Education (SAVE) plan, which aimed to provide financial relief to millions of borrowers struggling with student debt.
Missouri Attorney General Andrew Bailey, who spearheaded the legal challenge against the Biden administration, hailed the decision as a victory for fiscal responsibility and constitutional limits on executive power. The ruling not only blocks the implementation of the SAVE plan but also sets a legal precedent that could prevent future presidents from attempting similar large-scale student debt relief initiatives without explicit congressional approval.
BREAKING: Court Rules Biden’s Student Debt Plan ILLEGAL!
A U.S. appeals court ruled that Biden had no authority to push his student debt relief plan, which aimed to lower payments and speed up loan forgiveness – Reuters pic.twitter.com/UTc0XpXWFS
— Libs of TikTok (@libsoftiktok) February 18, 2025
Impact on Borrowers and Political Implications
The court’s decision has far-reaching consequences for the more than 8 million borrowers who were hoping to benefit from the SAVE plan. Many face the prospect of significantly higher monthly payments and extended repayment periods. The Penn Wharton Budget Model estimated that the plan would have cost taxpayers $475 billion over the next decade, a figure that raised concerns among fiscal conservatives.
“Though Joe Biden is out of office, this precedent is imperative to ensuring a President cannot force working Americans to foot the bill for someone else’s Ivy League debt,” said Attorney General Bailey.
The ruling has intensified the political debate surrounding student debt relief. Congressional Republicans accused Biden of using debt forgiveness as a ploy to gain votes before the 2024 election. Meanwhile, the Biden administration and its supporters argue that the SAVE plan was a necessary measure to address the growing student debt crisis and provide economic relief to millions of Americans.
Legal Reasoning and Future Implications
Judge L. Steven Grasz, in his ruling, emphasized that the Biden administration had “gone well beyond” its statutory authority. The court’s decision suggests that the most generous features of income-driven repayment programs, which lower monthly payments and accelerate forgiveness, may face continued judicial scrutiny.
“We are hard-pressed to conclude that Congress, by directing the Secretary to enact a repayment plan with varying payments based on income over a period not exceeding twenty-five years, believed it authorized the Secretary to wipe out any remaining principal or interest of any borrower in as few as ten years of low or no payments,” wrote Judge Grasz.
The injunction extends beyond the SAVE plan to other income-driven repayment programs, raising questions about the statutory authority for widespread loan forgiveness. This development has led to uncertainty about the future of student loan forgiveness under various repayment plans, potentially forcing millions of borrowers to transition to less generous options with higher monthly payments.
As the debate over student debt relief continues, Congress is considering proposals to repeal existing income-driven repayment plans and replace them with a system that eliminates loan forgiveness entirely. The 8th Circuit’s injunction has set the stage for a reevaluation of the executive branch’s role in student loan forgiveness, with potentially far-reaching consequences for current and future borrowers.
