US Supreme Court Puts Biden Administration's New Student Loan Plan on Hold

The US Supreme Court on Wednesday decided to keep in place a hold on the Biden administration’s latest multibillion-dollar student loan plan. The plan aims to lower borrower payments and expand eligibility for loan cancellation. The court rejected a request from the administration to reinstate the plan, which was previously blocked by the 8th U.S. Circuit Court of Appeals.

In an unsigned order, the Supreme Court indicated that it expects the 8th Circuit to provide a more detailed ruling on the plan "with appropriate dispatch." This decision comes as legal challenges to the plan continue through the federal court system.

The proposed plan, known as the SAVE plan, is designed to reduce monthly income-based repayments from 10% to 5% of a borrower's discretionary income. It also seeks to eliminate payments for borrowers earning less than 225% of the federal poverty line—equivalent to $32,800 annually for a single individual.

The administration's effort to provide a faster path to loan cancellation contrasts sharply with last year's Supreme Court ruling, which rejected an earlier plan that would have forgiven over $400 billion in student loan debt. The cost of the new SAVE plan is contentious: Republican-led states estimate it could cost $475 billion over the next decade, while the administration cites a Congressional Budget Office estimate of $276 billion.

The plan has faced legal challenges from multiple fronts. In June, separate rulings from judges in Kansas and Missouri blocked significant portions of the plan, though debt already forgiven under the plan was not affected. The 10th U.S. Circuit Court of Appeals had allowed a provision for reduced monthly payments to proceed, but Republican-led states sought to overturn this decision, leading to the Supreme Court's involvement.

Despite the Justice Department's suggestion that the Supreme Court take immediate action on the new plan, the justices declined to intervene further at this time.