A federal appeals court has blocked the Biden administration's income-driven student loan repayment and relief plan.
The Eighth Circuit Court of Appeals agreed with a lower court ruling that sided with a lawsuit filed by seven Republican-led states against former President Biden's Saving on a Valuable Education (SAVE) Plan.
The states argued that the U.S. Department of Education doesn't have the authority to cancel some student loans for borrowers, and claimed the Biden administration was using the SAVE Plan as a workaround after the Supreme Court blocked Biden's sweeping loan forgiveness plan in June 2023.
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"The Secretary has gone well beyond this authority by designing a plan where loans are largely forgiven rather than repaid," the appeals court said in its ruling. "We thus affirm the entry of the preliminary injunction, though we conclude the district court erred by not enjoining the entire rule and we remand with instructions to modify the injunction accordingly."
The SAVE Plan, which was created by executive order in 2023, provided some borrowers with lower, income-driven repayments on their student loans, while others could have their loans forgiven outright.
The White House at the time said that student loan borrowers enrolled in the SAVE Plan who have made payments for at least 10 years and originally took out up to $12,000 are eligible to have their loans automatically forgiven.
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Additionally, the White House said for every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments. That means someone enrolled in the SAVE Plan with an original debt of up to $21,000 would have their loans forgiven by the time they reach 20 years of payments.
However, Republicans who filed the lawsuit against the SAVE Plan argued that taxpayer dollars shouldn't be used to subsidize the student loan repayments of those who benefited from receiving higher education.
