Biden’s Student Loan Forgiveness Proposals Facing Roadblocks

It has been a tough few weeks for the Biden Administration’s efforts to provide broad student loan forgiveness to borrowers across the country as Republican-led states have notched several recent wins in court against the president’s proposals.

First, the Eighth Circuit issued an injunction against the Administration’s Saving on a Valuable Education (SAVE) income-driven repayment (IDR) plan, blocking it from going into effect for the roughly 8 million borrowers currently enrolled. The Department of Education issued a statement about the court’s decision and filed an emergency application with the Supreme Court to vacate the injunction.

The Supreme Court declined to lift the injunction, stating that it expects the lower court to “render its decision with appropriate dispatch.” As of now, the Department is still awaiting the Eighth Circuit’s ruling on the case’s merits. It is important to note that once that decision is issued, the Department may still bring the case to the Supreme Court on appeal, if necessary.

Perhaps encouraged by these developments, seven Republican-led states filed another lawsuit this week to block the latest student loan forgiveness plan from the Biden Administration. Following last year’s Supreme Court’s decision against the Administration’s original student loan forgiveness effort, the Biden Administration introduced another forgiveness plan, this time under a different statutory authority. This method, however, required the Department to go through a lengthy negotiated rulemaking process, which finally concluded in February of this year.

The result of these negotiations was a forgiveness plan that was narrower in scope, and targeted only specific groups of distressed borrowers, such as those who owe more now than they did when they started repayment. The Biden Administration expected this plan to go into effect this fall, but it has been temporarily blocked by the Georgia court until its hearing on September 18.

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Justin Monk