ST. LOUIS, Missouri: The implementation of parts of a new student debt relief plan by President Joe Biden's administration designed to lower monthly payments for millions of Americans was blocked by a U.S. appeals court this week.
The St. Louis-based 8th U.S. Circuit Court of Appeals was acting on a request by seven Republican-led states to put on hold parts of the U.S. Department of Education's debt relief plan not already blocked by a lower-court judge.
Last month, a ruling by St. Louis U.S. District Judge John Ross had blocked the department from forgiving further loans under the administration's Saving on a Valuable Education (SAVE) Plan but had not blocked the entire plan.
That plan provides more generous terms than past income-based repayment plans, lowering monthly payments for eligible borrowers and allowing those whose original principal balances were US$12,000 or less to have their debt forgiven after ten years.
State attorneys general led by Missouri Attorney General Andrew Bailey subsequently asked the 8th Circuit to block the rest of the SAVE Plan last week. The court did so through a one-page order granting an administrative stay.
On the social platform X, Bailey hailed the ruling as a "huge win for every American who still believes in paying their own way." He said the student loan plan "would have saddled working Americans with half-a-trillion dollars in Ivy League debt."
An Education Department spokesperson said it assessed the ruling's impact, would be in touch with any borrowers directly affected by it and "will continue to aggressively defend the SAVE Plan."
Biden, a Democrat, announced the SAVE Plan in 2022, alongside a broader $430 billion program that would have fulfilled a campaign promise by cancelling up to $20,000 in debt for up to 43 million Americans. The conservative-majority U.S. Supreme Court ultimately blocked it in June 2023.
The SAVE Plan was slated to take full effect on July 1, though parts of it have already been implemented.
The White House said that over 20 million borrowers could benefit from the SAVE Plan. The Education Department says that eight million are already enrolled, including 4.5 million whose monthly payments have been reduced to $0.
The Education Department said it had already granted $5.5 billion to 414,000 borrowers through the SAVE Plan.
The administration believed the plan would cost taxpayers around $156 billion over ten years, but Republican state attorneys general argue that its actual cost totaled around $475 billion.
Another federal judge in Kansas had also blocked parts of the SAVE Plan last month, though a different federal appeals court, the Denver-based 10th U.S. Circuit Court of Appeals, put part of that decision on hold. A group of Republican-led states have asked the U.S. Supreme Court to reinstate that injunction.