President Joe Biden’s new student-loan repayment plan just got dealt two blows by federal courts.
Earlier this year, the Education Department started implementing a SAVE provision ahead of schedule that canceled student debt for borrowers with original balances of $12,000 or less who made as few as 10 years of qualifying payments. The attorneys general argued that relief was unconstitutional, among other things, and requested the relief — and the plan overall — be blocked.
The Missouri court ruled on one of the lawsuits led by Missouri Attorney General Andrew Bailey that the Education Department can no longer carry out student-loan forgiveness via SAVE as the legal process continues. The ruling still preserves borrowers’ abilities to enroll and make payments through the plan.
“These borrowers have already made payments under the program, have already had those payments calculated under the early implementation of certain provisions of the Final Rule, and some borrowers anticipate imminent forgiveness,” the ruling stated. “These borrowers and the public have an interest in ensuring consistency in loan repayment programs, and any preliminary injunction would harm their expectations of such consistency.”
The Department of Education did not immediately respond to a request for comment from Business Insider.
Meanwhile, the Kansas court ruled that it would preserve actions the Education Department has already implemented through the SAVE plan, but it will halt the new provisions set to go into effect on July 1, including cutting payments for undergraduate borrowers in half.
Kansas’ ruling will go into effect on June 30.
Both of the rulings are preliminary, and while student-loan forgiveness is blocked for the time being, courts have yet to hand down their final rulings.
Judge Daniel Crabtree, who delivered the Kansas ruling, was previously skeptical of the GOP attorneys general’s case and ruled on June 7 that just three of the original eleven states had standing to challenge the plan.
Still, these two rulings are setbacks for borrowers who were hoping to benefit from the SAVE plan that the Education Department has been touting for the past year. While the department continues to carry out separate relief for borrowers through one-time account adjustments, its broader plan for debt cancellation — expected to benefit over 30 million borrowers — is highly likely to encounter legal challenges this fall, as well.
Kansas and Missouri’s attorneys general celebrated the rulings. Kansas’ Attorney General Kris Kobach wrote on X that “Kansas’s victory today is a victory for the entire country. As the court correctly held, whether to forgive billions of dollars of student debt is a major question that only Congress can answer. Biden’s administration is attempting to usurp Congress’s authority.”
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