Judges block most of Biden’s limited student loan relief program

On Monday, parts of US President Joe Biden’s limited student loan relief plan called Save on a Valuable Education (SAVE) were blocked by two separate court orders.

President Joe Biden speaks on student loan debt at Madison College on April 8, 2024 in Madison, Wisconsin. (AP Photo/Evan Vucci)

The preliminary injunctions issued in Kansas and Missouri were in response to lawsuits filed by two groups of Republican-led states that challenged the legality of the SAVE program launched by the Biden administration in August 2023.

In Kansas, U.S. District Judge Daniel Crabtree blocked implementation of the final part of the SAVE plan, which would have cut monthly student loan payments in half for undergraduate students starting in July.

Loans under this part of the SAVE program are repaid based on your income. It plans to reduce undergraduate student debt payments from 10 percent to 5 percent of income above 225 percent of the federal poverty line.

This meant, for example, that for a two-person household earning a combined $60,000 a year, $44,370 of income would be protected and monthly repayments would drop on July 1 from $130.25 to $65.13 a month.

Graduates would have their payments limited to 10 percent of the poverty line calculation. Payments on these SAVE plans will continue for 20 or 25 years, after which the balance of the debt will be forgiven.

In his ruling, Judge Crabtree found that three of the 11 states that challenged SAVE — Alaska, Texas, and South Carolina — had adequately demonstrated that President Biden exceeded his authority by creating the program without congressional authorization. The coalition of states was led by Kansas Attorney General Kris Kobach, and their lawsuit claimed that the debt relief program could hurt tax revenues in the states.

In Missouri, U.S. District Judge John Ross blocked Biden’s Department of Education from forgiving further loans under the SAVE plan. Six states, led by Missouri Attorney General Andrew Bailey, said their respective student loan servicers would suffer revenue losses when student debt is wiped clean.

Judge Ross also said Congress has not approved a repayment plan as far-reaching as Biden’s SAVE program. The Congressional Budget Office has estimated that the SAVE program will cost the federal government $230 billion over the next ten years.

Both justices who ruled in favor of the Republican-led legal effort to end Biden’s very limited student loan relief program were appointed by Democrat Barack Obama, Judge Crabtree in 2014 and Judge Ross in 2011.

In response to the initial orders, White House press secretary Karine Jean-Pierre stated that it was “unfortunate” that Republicans and “their allies fought tooth and nail” to block SAVE and that “courts are now rejecting the authority granted to the Department that has been used repeatedly for decades.” to improve income-driven repayment plans.

To date, 8 million people have enrolled in SAVE’s income-driven repayment plan, and 414,000 student loan borrowers have received full debt forgiveness. Orders do not affect forgiveness already granted.

The orders put in limbo more than 43 million people with more than $1.7 trillion in student loan debt. As Mike Pierce, executive director of the Student Borrower Protection Center, said Washington Post Office“Today, two different gangs of right-wing attorneys general got from federal judges in Kansas and Missouri exactly what they wanted: a recipe for chaos in the student loan system.”

Powerful financial interests are behind the legal campaign to prevent any relief for those burdened with massive student loan debt in the US. Most of the federal student financial aid system is administered by private service companies that collect fees on each payment you make. Meanwhile, the U.S. government pools the loans and sells them to private investors who make money on repayment terms that include interest rates of 5 to 10 percent.

The latest lawsuits draw on the same arguments that were used to block the Biden administration’s original student loan forgiveness program, which was invalidated by the Supreme Court a year ago. Under this program, Biden planned to forgive $10,000 in student debt for borrowers earning up to $125,000 a year. In its 6-3 decision, the Supreme Court ruled that Biden did not have the authority to forgive $400 billion in loans over a 30-year period.

Although the courts, acting on behalf of the financial oligarchy that supports both Democrats and Republicans, have repeatedly intervened to block the most limited relief from the crushing financial impact of student debt, no such restrictions have been placed on bailing out failing banks or financing criminal imperialist wars on all over the world.