The Court of Appeals for the Eighth Circuit on Friday issued a preliminary injunction against President Biden’s SAVE income-driven repayment plan, which was designed to reduce monthly payments and expedite debt relief for approximately eight million student loan borrowers. This legal decision follows a temporary stay placed on the plan in July, initiated by a lawsuit from Missouri’s Attorney General.
Background: The SAVE plan aimed to significantly lower payment amounts, in some cases to $0 per month, and forgive remaining balances sooner than previous plans. However, the plan has faced legal challenges from several GOP-led states, arguing that it lacks congressional authorization and imposes undue financial burdens on taxpayers. The Appeals Court’s injunction halts any further implementation of the plan, including the forgiveness of principal or interest and the non-accrual of interest.
What they’re saying: “Among the considerations here are that all borrowers currently impacted by our administrative stay are in administrative forbearance and thus not required to pay principal or interest on their loans,” the Court stated in its ruling.
- The ruling aligns with a previous Supreme Court decision that struck down another of Biden’s student loan plans as unconstitutional.
State pushback: Missouri AG Andrew Bailey celebrated the ruling, stating, “This is a huge win for every American who still believes in paying their own way.” He criticized the administration for attempting to “saddle working Americans with $500 billion in someone else’s Ivy League debt.”
Between the lines: Borrowers are caught in a state of limbo. While administrative forbearance offers temporary relief, there’s growing anxiety about the plan’s ultimate fate.
What happens next: The injunction will remain in effect until further orders from the 8th Circuit or the Supreme Court.
