A Biden Administration debt relief plan that could cancel billions in student loans was halted Friday by a federal appeals court.
The US Court of Appeals for the Eighth Circuit granted a GOP-led state coalition’s request for the court to temporarily block the program while the US Education Department appeals a lower court ruling against the plan.
The Eight Circuit said in the per curiam opinion that the states showed “at least a fair chance” of success on the merits of their case, and irreparable harm without the temporary injunction. “The SAVE plan is even larger in scope than the loan-cancellation program at issue in Nebraska,” the opinion says, referencing the US Supreme Court’s 2023 decision tossing Biden’s prior student loan forgiveness plan.
The decision Friday supersedes an administrative stay the Eighth Circuit put in place in July. The ruling has the same effect as the stay—temporarily barring President Joe Biden’s Education Department from administering the program while the state coalition fights for the program to be permanently struck as unconstitutional.
Following the Eighth Circuit’s July ruling, however, the Education Department placed millions of borrowers enrolled in the challenged SAVE plan in forbearance as litigation over the plan continues.
The Education Department rule implementing the plan allows borrowers to enroll in income-driven repayment plans that lower their monthly federal student loan bills to as low as zero. The rule also cancels loans after 10 years of payments for those who borrowed $12,000 or less, increasing by 1 year for every additional $1,000 of the borrower’s original principal balance. Both aspects of the plan were blocked by the ruling Friday.
The Eighth Circuit ruling stems from a Missouri-led challenge to the Biden administration program. The US District Court for the Eastern District of Missouri in June enjoined the program’s debt forgivenes aspect but left in place the income-driven replayments. The Eighth Circuit ruling broadened the injunction to both aspects, saying the Education Department had crafted a new plan since the lower court ruling that had “effectively rendered that injunction a nullity.”
A seperate coalition of states, led by Kansas, persuaded a federal district court in Kansas to enjoin the program but the Tenth Circuit reversed the injunction pending appeal. Three states in the Kansas-led coalition—Alaska, South Carolina, and Texas— have asked the Supreme Court to step in and vacate the Tenth Circuit’s ruling.
Judges Raymond W. Gruender, Ralph Erickson, and Leonard Steven Grasz were on the panel.
