Appeals court blocks Biden student debt plan as Supreme Court battle brews

A federal appeals court on Friday blocked President Biden’s new student debt relief plan, teeing up a potential expansion of the legal fight already brewing at the Supreme Court. 

The 8th U.S. Circuit Court of Appeals ruling extends the brief pause it ordered last month. The court’s updated decision prevents the administration from moving ahead with its Saving on a Valuable Education (SAVE) plan until the court resolves the lawsuit, which could take months. 

The 3-0 ruling called the plan a “vast assertion of newfound power” and said the Biden administration fell far short of showing clear authorization from Congress.  

“The new SAVE plan … is an order of magnitude broader than anything that has come before,” the court wrote in its unsigned, 10-page opinion. 

The panel, all appointed by Republican presidents, also rejected the administration’s attempted workaround after a district judge invalidated portions of the plan at a previous stage of the case. 

Seven Republican state attorneys general sued over the SAVE plan, which was introduced last year after the Supreme Court struck down the president’s universal student debt relief program. 

The new income-driven repayment plan had two phases. The first phase occurred last fall, raising the income protected from payments from 150 percent above the federal poverty guidelines to 225 percent and waiving accrued unpaid interest outside the calculated payments. 

The second part was set to occur in July, when undergraduate student loan repayments were to be dropped from 10 percent of discretionary income to 5 percent and other loan forgiveness options became available to certain groups. 

The new ruling adds to the state of confusion borrowers have been in due to the various rulings about the SAVE plan, with potential déjà vu heading their way as the Supreme Court is asked to get involved.  

In a separate challenge, three Republican state attorneys general have filed an emergency request urging the high court to temporarily block the second half of the plan — and agree to take up the challenge on the merits during the court’s next term. 

Friday’s ruling could lead the Justice Department to file an emergency appeal at the Supreme Court, too, or similarly urge the court to hear the case in full, now. 

The Hill has reached out to the Justice Department and the Department of Education for comment.