Supreme Court won’t reinstate Biden’s new student debt plan 

The Supreme Court on Wednesday discarded the Biden administration’s request to temporarily reinstate its new student debt plan that would lower payments for millions of borrowers. 

The Justice Department’s emergency appeal asked the Supreme Court to lift a lower-court ruling currently halting President Biden’s plan as a legal challenge proceeds. 

The order had no public dissents. 

It is not a final ruling, and the legality of the plan could ultimately return to the high court. 

“The Court expects that the Court of Appeals will render its decision with appropriate dispatch,” reads one of the two orders declining to take up the cases at this time.

For now, it drives a sword in the administration’s ability to implement its Saving on a Valuable Education (SAVE) plan.
 
The first phase began last October, increasing the amount of income protected from loan payments to 225 percent of the federal poverty line and not letting unpaid interest accrue.  

The second phase, which was set to begin in July, decreases monthly payments from 10 percent of a borrower’s discretionary income to 5 percent. The plan also shortens the repayment period to 10 years for qualifying borrowers, after which their remaining balance would be forgiven. 

Roughly 7.5 million borrowers have already signed up for the SAVE plan, and 150,000 individuals have had their debt canceled under the new income-driven repayment plan.  

Two groups of Republican state attorneys general have challenged the plan, contending Biden doesn’t have legal authority to implement it and that it flouts the Supreme Court’s decision last year striking down one the president’s earlier student debt programs. 

“There is a reason the Final Rule is the Government’s backup plan for mass loan forgiveness: the Government’s statutory arguments are even weaker than in Biden v. Nebraska,” one group of states wrote in court filings, referring to that earlier case. 

The other group similarly wrote, “This current attempt to unilaterally cancel debt is every bit as unlawful as the first 12-digit effort this Court rejected.” 

Both lawsuits reached the Supreme Court in recent weeks on its emergency docket after conflicting rulings in lower courts. 

Last month, Alaska, South Carolina and Texas asked the justices to reinstate a district court ruling that blocks portions of the plan as the case proceeds. The 10th U.S. Circuit Court of Appeals lifted the block at the Justice Department’s request. 

Soon after, the 8th U.S. Circuit Court of Appeals effectively halted the entire plan in response to the other challenge, which is being led by Missouri. It is joined by six other Republican state attorneys general: Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma. 

The Biden administration then sought the Supreme Court’s emergency intervention to temporarily lift that order. 

“The States fail to justify allowing that extraordinary injunction to continue to harm millions of borrowers while this appeal is litigated,” U.S. Solicitor General Elizabeth Prelogar wrote in court filings. 

The justices rejected that request and the effort mounted in the other lawsuit by the three Republican state attorneys general. Both cases will now return to lower courts. 

The Supreme Court also turned away an alternative idea proposed by all sides to go ahead and take up the legality of the SAVE plan on the merits for the court’s upcoming term. 

That would’ve mimicked how the court handled the previous iteration of student debt relief challenges. 

But the Supreme Court is staying away this time, at least for now.