In another blow to the Biden administration’s plan to lower payments and forgive student loan debt, a court blocked a new repayment plan.
The Department of Education had implemented a new agency rule to create the SAVE program. The U.S. Court of Appeals for the 8th Circuit granted a request for an administrative stay to prevent the Biden administration from implementing or acting under that agency rule. Borrowers enrolled in the program will see their loans frozen until the court process is complete.
The court’s ruling was issued Thursday in response to an emergency motion from Missouri Attorney General Andrew Bailey. Utah had joined the effort to block the SAVE program.
“The Court granted our emergency motion to BLOCK Joe Biden’s entire illegal student loan plan, which would have saddled working Americans with half-a-trillion dollars in Ivy League debt,” said Bailey on social media. “HUGE win for every American who still believes in paying their own way.”
Utah Attorney General Sean Reyes had called the forgiveness plan a “purely political election-year maneuver” and said it was “even more problematic” than previous attempts because it used numbers and calculations from the first failed attempt.
U.S. Secretary of Education Miguel Cardona said in a White House press release the administration would continue to fight for its policies in court.
Calling the lawsuits “politically motivated,” Cardona said, “The SAVE program is a bold and urgently needed effort to fix what’s broken in our student loan system.” He said the ruling could have negative consequences for borrowers.
Efforts to block the SAVE program
Ahead of the Thursday ruling, lower courts had already blocked certain provisions of the program, including the administration’s ability to forgive student loans, until the court could rule on the constitutionality of the program in full. Republican attorneys general have challenged the SAVE program in court because they say Congress did not give the Biden administration the go-ahead on the program so the administration lacks the authority to implement it.
U.S. District Judge John A. Ross of the Eastern District of Missouri blocked the Department of Education from forgiving more student loans under the SAVE program until he issued a full ruling. Missouri Attorney General Andrew Bailey had sued alongside other attorneys general and claimed the Biden administration lacked the authority to implement the loan forgiveness.
The court ruled it is likely these states will succeed in their argument, which led to the court blocking this provision.
U.S. District Judge Daniel D. Crabtree for the District of Kansas blocked part of the SAVE program that would lower monthly payments for some borrowers. The court ruled the states suing the Department of Education would likely succeed in their argument that Congress did not authorize the administration to do this. Though the states had asked the court to block the program entirely, the court did not do so because parts of the program had already been implemented.
Debt already forgiven was not impacted by the rulings from Ross or Crabtree. Now with the latest federal appeals court ruling, the entire program is blocked, which will pause payments for eight million borrowers.
Nonprofit group files complaint
Also on Thursday, the Foundation for Accountability and Civic Trust filed a complaint requesting the Office of Special Counsel to investigate whether or not Cardona has violated the Hatch Act. The nonprofit organization pointed toward an email sent to borrowers in July.
The email was addressed to federal student loan borrowers and described Republican elected officials as “siding with special interests.”
“President Biden and I are determined to lower costs for student loan borrowers, to make repaying student debt affordable and realistic, and to build on our separate efforts that have already provided relief to 4.75 million Americans — no matter how many times Republican elected officials try to stop us,” the email said.
The Foundation for Accountability and Civic Trust said it was submitting the complaint because “the email made political arguments and numerous times specifically identified the political party by name that Cardona opposes in a disparaging manner to generate opposition to the political candidates and party.” The group urged the Office of Special Counsel to investigate the email.
The Department of Education did not immediately return the Deseret News’ request for comment.
New loan forgiveness for borrowers
The Biden administration also announced Thursday it is canceling more student debt.
Through Public Service Loan Forgiveness, the administration cancelled student debt for 35,000 people, according to a White House press release. The forgiveness applied to teachers, nurses, law enforcement officials and first responders. It canceled around $1.2 billion in debt.
“This is relief that will bring real change in their lives and marks another win for this administration’s relentless and unapologetic work to fix a broken student loan system,” said Cardona.
Zooming out
The Biden administration’s efforts to forgive student loans have drawn support and criticism.
USA Today columnist Sara Pequeño said these student loan forgiveness efforts could help Biden win reelection and fulfill his campaign promise. She also wrote that it addresses the concerns of young Americans as they grapple with the high cost of college.
“It’s good – great, even – that Biden is forgiving this debt,” wrote Pequeño. “Today’s college graduates are saddled with more debt immediately out of college than our predecessors; gone are the days of paying off your loans with summer jobs or those first few post-grad paychecks. It shows that his administration is aware how different the system is compared with decades prior.”
Critics of the administration’s efforts say student debt forgiveness is regressive (benefits the wealthy as loans are concentrated across high-wealth households), oversteps the authority of Congress, and will have lasting negative consequences on universities.
“As the President himself suggested just a few years ago, such broad forgiveness is simply bad policy. Not only is it regressive, it also provides colleges and universities with precisely the wrong incentives,” Beth Akers, senior fellow at American Enterprise Institute, wrote. “When students don’t have to pay back the money they borrow to pay for college, colleges don’t have any reason to keep prices low. On the contrary, some students will necessarily benefit from paying and borrowing as much as possible.”
Dozens of Republican lawmakers have also criticized the administration’s attempts to find new ways to forgive student debt saying in a letter the Department of Education is shifting the burden onto taxpayers who did not take out loans.
“In addition to the fiscally irresponsible nature of this backdoor attempt to enact ‘free’ college, the administration continues to use borrowers as political pawns knowing full well these proposed actions are illegal,” wrote the lawmakers. “The Supreme Court has made it abundantly clear that there is zero authority to write-off federal student loans en masse last June when the Department’s ‘Plan A’ was ruled unconstitutional.”
Democratic lawmakers also wrote a letter urging the Department of Education to continue to find ways to cancel borrowers’ debt and called the Supreme Court’s decision unjust.