The Supreme Court on Wednesday maintained a hold on the Biden administration’s latest multibillion-dollar plan to reduce payments for millions of student loan borrowers while legal challenges continue to progress through lower courts.
The justices rejected the administration’s request to reinstate most of the plan, which the 8th U.S. Circuit Court of Appeals had blocked.
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In an unsigned order, the court indicated it expects the appeals court to issue a more comprehensive decision on the plan “with appropriate dispatch.”
The Education Department seeks to expedite loan cancellation and reduce monthly income-based repayments from 10% to 5% of a borrower’s discretionary income.
Additionally, the plan would exempt borrowers from making payments if their earnings are less than 225% of the federal poverty line, which is $32,800 annually for an individual.
According to the Associated Press, last year, the Supreme Court’s conservative majority struck down a previous plan that would have eliminated over $400 billion in student loan debt. Estimates of the new SAVE plan’s cost vary: Republican-led states challenging the plan estimate it at $475 billion over ten years. The administration cites a Congressional Budget Office estimate of $276 billion.
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Two separate legal challenges to the SAVE plan are currently moving through federal courts. In June, judges in Kansas and Missouri issued rulings that blocked significant portions of the plan, although debt that had already been forgiven remained unaffected.
The 10th U.S. Circuit Court of Appeals later allowed the Education Department to proceed with a provision for lower monthly payments. Still, Republican-led states sought to have the Supreme Court overturn that decision.
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However, after the 8th Circuit blocked the entire plan, the states found no need for Supreme Court intervention, as the justices noted in a separate Wednesday order.
The Justice Department had suggested that the Supreme Court could take up the legal battle over the new plan, as it did with the earlier debt forgiveness plan, but the justices declined to do so at this time.
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