Courts Clip Biden’s Student Loan Giveaway – Reality Check for the Left

zimmytws /
zimmytws /

Someone finally stopped President Biden’s wild ride with student loans. Two federal judges in Kansas and Missouri have halted parts of the administration’s SAVE (Saving on a Valuable Education) repayment plan. This plan, which lowers borrowers’ monthly payments and speeds up debt forgiveness, faces serious legal challenges.

Republican-led states call out the Biden administration for overstepping its bounds with the SAVE plan. According to them, this scheme isn’t just generous—it’s an outright abuse of executive power. And guess what? The judges agreed, granting partial preliminary injunctions on Monday to pause critical parts of the plan until the whole legal battle plays out.

So, what’s the fallout? First, the Biden administration can’t cancel any more federal student debt for those enrolled in the SAVE plan. This is a big deal, considering that $5.5 billion has been wiped off the books for 414,000 borrowers. Second, other plan provisions are also in limbo, leaving millions wondering if their promised payment reductions will ever happen.

White House press secretary Karine Jean-Pierre isn’t happy, of course. She’s promising that the administration will use every tool to relieve students and borrowers, and the Department of Justice is gearing up for a fight. The Department of Education, meanwhile, is keeping mum for now.

This legal showdown comes after the Supreme Court shot down Biden’s flagship student loan forgiveness program last summer. Undeterred, Biden rolled out the SAVE plan, which ties monthly payments to a borrower’s income and family size, offering even more generous terms than existing income-driven repayment plans, especially for low-income borrowers. Over 8 million borrowers have signed up, with 4.6 million enjoying a $0 monthly payment.

SAVE isn’t just about lower payments—it’s also about faster forgiveness. Borrowers with $12,000 or less can see their debt forgiven after ten years of payments, compared to the 20 years required under other plans. For every additional $1,000 borrowed, another year of payments is added. And here’s a sweetener: under SAVE, unpaid interest doesn’t pile up if you make your total monthly payment. So, if you owe $50 in interest but can only pay $30, the remaining $20 gets waived. Not a bad deal if you can get it.

But this is about more than just helping borrowers. The Republican states argue that the SAVE plan transforms loans into grants without congressional approval, effectively bypassing the legislative branch. In 1993, Congress gave the Department of Education the power to create different repayment plans. Still, these lawsuits claim that Biden’s version goes way beyond what was intended.

Missouri Attorney General Andrew Bailey summed it up nicely: “Congress never gave Biden the authority to saddle working Americans with half a trillion dollars in other people’s debt. A huge win for the Constitution.”

The cost of the SAVE plan is staggering, with estimates ranging from $138 billion to $475 billion over ten years, depending on enrollment numbers. Compare that to Biden’s original student loan forgiveness program, which was expected to cost around $400 billion.

So, what’s next for borrowers already in the SAVE plan? They can stay put for now, with their monthly payments remaining unchanged while the legal dust settles. But the future of this controversial plan is uncertain, especially with a critical provision set to kick in next month potentially on hold. This provision would reduce payments on undergraduate loans from 10% to 5% of discretionary income and create a weighted average for those with both undergraduate and graduate loans.

The legal battles are heating up, with eleven states led by Kansas filing one lawsuit in late March and another group of seven states led by Missouri filing soon after. These states are no strangers to taking on Biden, having previously sued over his sweeping, one-time student loan forgiveness program.

In the end, the message is clear: enough is enough. The Biden administration’s attempts to unilaterally forgive massive amounts of student debt face severe pushback. It’s high time we return to common sense and respect the limits of executive power.