INDIANA – President Joe Biden’s administration is asking the nation’s highest court to allow its new student loan repayment plan to go through.
On August 9, the 8th Circuit Court of Appeals blocked the SAVE income-driven repayment plan. The plan intended to give borrowers lower monthly payments and a shorter timeline for debt relief.
Eight million borrowed funds were enrolled in SAVE.
Two groups of GOP state attorneys general filed lawsuits to block parts of SAVE. The Education Department placed all enrolled borrowers on forbearance until the legal process was resolved.
Biden’s Justice Department is asking the Supreme Court to lift the 8th Circuit’s block on the plan and allow the administration to move forward with SAVE’s implementation.
“The Eighth Circuit’s injunction has severely harmed millions of borrowers and the Department by blocking long-planned changes and creating widespread confusion and uncertainty,” Solicitor General Elizabeth Prelogar said in the filing. “Indeed, as the Eighth Circuit acknowledged, the injunction has forced the Department to place the affected borrowers into temporary forbearance — a result that is unambiguously worse for all involved.”
Prelogar asked the Supreme Court to lift the 8th Circuit’s block on SAVE and, if not, take on the case and expedite it in the fall.
This is in response to the lawsuit led by Missouri’s attorney general, who said that allowing SAVE to go through would harm the student loan company MOHELA’s revenue. Prelogar argued that the 8th Circuit’s ruling was “overbroad” and, at the very least, should not apply to borrowers who MOHELA does not service.
She claims permanently blocking SAVE would cause harm to the Education Department and the millions of enrolled borrowers because the department would be required to recalculate monthly payments and retrain servicer staff.
Prelogar said, “Borrowers would suffer additional harm if they are eventually sent higher bills and told that they can no longer count on the forgiveness they were promised at the end of their repayment periods.”
The Supreme Court asked the GOP states to respond by August 19.
