WASHINGTON – The Supreme Court on Wednesday rejected a bid by the Biden administration to revive the latest plan to resolve federal student loan debt.
In a short order, the court rejected the administration’s urgent request to overturn the nationwide ban imposed by the appeals court. There were no significant disagreements.
The decision said the appeals court, which is currently hearing the case, should “decide properly”.
The Education Department issued a regulation that finalized the valuable education savings, or SAVE, plan in July 2023, a month after the Supreme Court ruled that the administration did not have the authority to implement President Joe Biden’s earlier loan forgiveness program.
The new effort, like the previous one, was challenged in several conservative states led by Missouri.
“This court order is a stark reminder to the Biden-Harris administration that Congress did not give them the authority to dump working Americans with $500 billion in debt from another Ivy League,” Missouri Attorney General Andrew Bailey said in a statement. “This is a huge win for every American who still believes in paying their own way.”
A spokeswoman for the Department of Education said the administration is still working to reduce repayment options for borrowers.
“We are disappointed by this decision, particularly as lifting the injunction would have allowed for lower fees and other benefits for borrowers across the country,” the spokesman said in a statement. “The Department seeks to minimize additional inconvenience and disruption to borrowers while we await a final decision from the Eighth Circuit.”
The new proposal has several provisions, including one that would limit undergraduate loan repayment to 5 percent of one’s income. Previously, the upper limit was 10 percent.
Challengers said that would require up to $475 billion in spending that has not been approved by Congress. They say it should be blocked for the same reason the Supreme Court blocked Biden’s earlier plan.
Under the “supreme questions” doctrine, adopted by the Court’s conservative courts, federal agencies cannot initiate sweeping new policies with significant economic effects without express authorization from Congress.
The states argued in court documents that the Biden administration’s “assurance of an unfettered right to cancel every penny of every loan is staggering.”
Other provisions in the new plan would set limits on accrued interest and shorten the repayment period for some small loans before they could be forgiven.
The states sued in April to try to block the plan, and a federal judge in Missouri said only that the reduced repayment proposal should be delayed.
But in an Aug. 9 decision, the 8th US Circuit Court of Appeals in St. Louis issued a broader injunction that put other orders on hold.
In court filings, solicitor Elizabeth Prelogar said the changes to repayment amounts are allowed under a 1993 federal law that allows the Department of Education to determine an “appropriate portion” of revenue to calculate repayment amounts and set repayment schedules.
He said the “extremely broad” appeals court order goes beyond the new plan and prevents enforcement of previous repayment terms changes dating back to 1994, upsetting the established expectations of borrowers who have made payments for years or even decades.
About 8 million people have already signed up for the SAVE program, and other provisions have been in place in the past, allowing repayments to be reduced.
The plan has also been challenged in other courts, and parts of it have been blocked by judges. But the 8th Circuit’s decision has made those cases less relevant.
For this reason, the Supreme Court on Wednesday rejected a separate application for the plan by a group of different states.
This article was originally published on NBCNews.com
