WASHINGTON — The Supreme Court on Wednesday rejected a request by the Biden administration to revive the latest plan to fight federal student loan debt.
The court in a brief order denied an emergency request by the administration to lift a nationwide injunction imposed by an appeals court. There were no dissents.
The Education Department issued a rule finalizing its Saving on a Valuable Education, or SAVE, plan in July 2023, the month after the Supreme Court ruled that the administration lacked the authority to implement Biden’s previous loan forgiveness program.
The new effort, like the previous one, was opposed by several conservative-leaning states, led by Missouri.
The new proposal contains several provisions, including one that would cap the amount students must repay for their undergraduate loans at 5% of their income. Previously, the cap was 10%.
Opponents say it would require spending as much as $475 billion, which Congress has not authorized. They say the plan should be blocked for the same reason that led the Supreme Court to block Biden’s previous plan.
Under the “major questions” doctrine adopted by the Court’s conservative justices, federal agencies cannot launch sweeping new policies with significant economic effects without express authorization from Congress.
The states argued in court that “the Biden administration’s assertion of its unlimited authority to forgive every penny of every loan is astounding.”
Other provisions of the new plan would impose limits on accrued interest and shorten the repayment period for some small loans, which would then allow them to be forgiven.
States sued in April to try to block the plan, and a federal judge in Missouri only ruled that the shortened reimbursement proposal should be suspended.
But in an Aug. 9 decision, the St. Louis-based U.S. Court of Appeals for the 8th Circuit issued a more sweeping injunction putting the entire plan on hold.
In court documents, Solicitor General Elizabeth Prelogar said the changes to the repayment amounts are authorized by a 1993 federal law that says the Department of Education can determine the “appropriate share” of income to calculate payment amounts and also to set repayment deadlines.
She said the appeals court’s “extremely broad” injunction goes beyond the new plan and blocks implementation of previous changes to repayment terms dating back to 1994, “thus disrupting the established expectations of borrowers who have made payments for years, if not decades.”
About 8 million people are already enrolled in the SAVE plan, with other provisions already in place that have reduced reimbursement amounts.
