On Thursday, a federal appeals court temporarily blocked President Biden's signature Saving on a Valuable Education (SAVE) student loan program from moving forward, just a day after he announced another round of student loan forgiveness totalling $1.2 billion for 35,000 public service workers.
On June 24, two federal judges, in Missouri and Kansas, halted parts of Biden's SAVE student loan repayment plan, which had been set to begin July 1. Thursday's ruling is the latest development in legal battles over the SAVE program, as three GOP states – Texas, South Carolina and Alaska –
asked the Supreme Court to block Biden's SAVE program in an emergency filing last week.
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This latest appeals court ruling will prohibit the Education Department from moving ahead with major provisions of the SAVE program – essentially prohibiting the administration from implementing the parts of the SAVE plan that were not already blocked by lower courts. Republicans have argued that the program far exceeds the administration's legal authority and that President Biden was overstepping his executive action without approval from Congress.
In June, two injunctions handed down by federal judges put the SAVE program on hold:
- In the Missouri ruling, District Judge John Ross of the Eastern District blocked the Education Department from carrying out " any further loan forgiveness for borrowers" under the SAVE program until he decides the full case. He agreed that the program illegally deprives state loan operators of revenue. SAVE would harm Missouri, he said, because it would reduce the fees that the Education Department pays to the Missouri Higher Education Assistance Agency, the same entity at the center of the Supreme Court's case over Biden's first student debt relief program.
- In the Kansas ruling, District Judge Daniel Crabtree blocked the Education Department from implementing a part of the SAVE program that would lower some borrower's monthly payments. However, he declined to block the entirety of the program, citing concerns about unwinding the parts of the program that have already been implemented.
Related: "Supreme Court must block Biden's student loan plan': States file emergency petition
As a result of this latest ruling, an Education Department spokesperson said in a statement that the agency will continue to "aggressively defend the SAVE plan … We are assessing the impacts of this ruling and will be in touch directly with borrowers with any impacts that affect them."
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
