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- Three Republican-led states are asking the Supreme Court to block Biden's student loan plan.
- The 10th Circuit Court allowed part of the plan, leading to an appeal.
- The case affects millions of borrowers in ongoing litigation over student loan forgiveness.
Attorneys general from Alaska, South Carolina and Texas have filed a petition with the Supreme Court to block President Joe Biden's student loan repayment and forgiveness plan, known as the Saving on a Valuable Education (SAVE) plan.
The states argue that the plan is an “illegal debt-cancellation scheme” that could cost the public hundreds of billions of dollars. This lawsuit follows a series of court decisions that have left parts of the plan in a state of uncertainty.
Related: Lawsuit against SAVE plan will likely fail
Background and legal proceedings
The SAVE plan, introduced by the Biden administration, aims to reduce monthly payments on student loans and offer debt forgiveness to certain borrowers. Specifically, the plan would reduce payments from 10% of disposable income to 5% and allow loans initially totaling $12,000 or less to be forgiven after ten years instead of twenty or twenty-five.
On June 24, 2024, two federal judges partially agreed with the Republican-led states and blocked some aspects of the SAVE plan, which was scheduled to take effect on July 1.
However, following an appeal by the Biden administration, the 10th Circuit Court of Appeals ruled on June 30 that the government could continue reducing monthly student loan payments starting in July while the litigation continued.
This ruling had no impact on the early debt relief provision, which remains blocked.
Argument and appeal
The states are seeking to overturn the 10th Circuit's ruling, effectively halting implementation of the SAVE plan. They argue that the plan exceeds the government's authority and imposes an undue financial burden on taxpayers.
South Carolina Attorney General Alan Wilson said the Supreme Court had previously ruled against such broad executive authority to forgive student loans and criticized Biden for trying to circumvent that ruling.
The emergency motion filed Monday asks the Supreme Court to grant a pre-judgment leave to review the case so the court can review the case before the lower court makes its final decisions. The expedited review is intended to minimize what the states call “substantial and ongoing” harm caused by the Education Department's actions.
Impact on borrowers
Millions of student loan borrowers are caught up in this litigation and face another round of uncertainty.
The 10th Circuit Court's decision means many borrowers can expect a reduction in their monthly payments starting immediately, but broader debt relief measures remain in limbo. The Biden administration has imposed administrative forbearance on 3 million borrowers while legal challenges continue, providing temporary relief.
The challenge to the SAVE plan by Alaska, South Carolina and Texas underscores the ongoing dispute over President Biden's efforts to provide student loan forgiveness.
Don’t miss these other stories:
Average student loan debt by state in 2024. What is the SAVE repayment plan? What is the average monthly student loan payment?
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