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The 8th Circuit Court of Appeals has issued an extraordinary administrative stay, effectively blocking President Biden’s Saving On A Valuable Education (SAVE) plan.
This decision, dated July 18, 2024, prohibits the administration from implementing or executing the plan until an interim injunction is decided and an appeal is pending.
This move is likely to force the Biden administration to suspend all student loan activity under the SAVE plan and extend the current administrative forbearance while the issues surrounding the plan are resolved.
Legal implications and consequences
The emergency stay was granted in response to a request from the state of Missouri and other states. The states argued that the SAVE plan, a key initiative of the Biden administration to ease the burden of student loan debt, was unconstitutional and required immediate judicial intervention to stop its progress.
The unsigned court order underscores the controversial nature of the plan and the litigation surrounding it.
The immediate impact of the court's decision is profound. The administrative stay halts implementation of the SAVE Plan, which was intended to provide significant relief to student loan borrowers. The SAVE Plan's debt relief initiative was halted by the 10th Circuit Court of Appeals, but pending this order, the plan was allowed to go into effect with lower repayments.
The Biden administration must now suspend all related activities, including reducing repayment amounts, which would create uncertainty for millions of borrowers who had counted on the benefits of the plan.
That stay will remain in effect until the 8th Circuit issues its broader preliminary injunction and an appeal is heard, a process that could take weeks or months.
The result is that the current administrative forbearance (which was in effect for the month of July 2024) is likely to be extended until these issues are resolved.
Final thoughts
The 8th Circuit Court of Appeals' blocking of the SAVE plan (and also the 10th Circuit Court of Appeals' stay of the case) underscores the difficult legal issues the Biden administration faces in unilaterally offering debt relief and changing repayment plans.
Although the SAVE plan may still prevail in court, the road ahead will be challenging.
The emergency stay not only halts the plan's implementation, but also sets the stage for a lengthy legal battle that will end up in the Supreme Court. In the meantime, student loan borrowers are stuck in limbo.
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