WASHINGTON (AP) — The Supreme Court on Wednesday put on hold the Biden administration’s latest multibillion-dollar plan that would have reduced payments for millions of borrowers while lower court challenges play out.
The judges rejected a government request to reinstate most of the law, which was blocked by the 8th U.S. Circuit Court of Appeals.
In an unsigned order, the court said it expected the appeals court to issue a more comprehensive decision on the plan “with due urgency.”
The Education Department wants to create a faster path to loan repayment and reduce income-based monthly repayments from 10% to 5% of the borrower’s disposable income. The plan also calls for borrowers not to have to make payments if they earn less than 225% of the federal poverty level — $32,800 a year for a single person.
Last year, the Supreme Court’s conservative majority rejected an earlier plan that would have wiped out more than $400 billion in student loan debt.
Cost estimates for the fresh SAVE plan vary. The Republican-led states challenging the plan put the cost at $475 billion over ten years. The government cites a Congressional Budget Office estimate of $276 billion.
Two separate lawsuits challenging the SAVE plan are pending in federal court. In June, judges in Kansas and Missouri issued separate rulings blocking much of the government’s plan, leaving debts that had already been forgiven under the plan unaffected.
The 10th U.S. Circuit Court of Appeals issued a ruling allowing the department to issue a rule providing for lower monthly payments, but Republican-led states had asked the Supreme Court to overturn that ruling.
But after the 8th Circuit blocked the entire plan, Supreme Court intervention on behalf of the states was no longer necessary, the justices said in a separate ruling issued Wednesday.
The Justice Department had suggested that the Supreme Court could now take up litigation over the fresh plan, as it did with the previous debt relief plan, but the justices declined to do so.
“This is a recipe for chaos throughout the student loan system,” said Mike Pierce, executive director of the Student Borrower Protection Center, an advocacy group.
“No court has made a substantive decision in this case, but despite all that, borrowers are in a state of limbo where their rights do not apply to them,” Pierce said.
Eight million people were already enrolled in the SAVE program when the lower court suspended it, and more than 10 million more were looking for ways to make the monthly payments, he said.
Sheng Li, a litigation attorney with the New Civil Liberties Alliance, a legal group funded by conservative donors, welcomed the order. “There was no basis to lift the injunction because the Education Department’s latest loan cancellation program is just as unlawful as the one the court struck down a year ago,” he said in a statement.
