Remainder of Biden’s student debt relief plan blocked by appeals court
WASHINGTON - A federal appeals court has blocked the implementation of the Biden administration's student debt relief plan, which would have lowered monthly payments for millions of borrowers.
In a ruling Thursday, the 8th Circuit Court of Appeals granted a motion for an administrative stay filed by a group of Republican-led states seeking to invalidate the administration's entire student loan forgiveness program.
The court's order prohibits the administration from implementing the parts of the SAVE plan that were not already blocked by lower court rulings.
The ruling comes the same day the Biden administration announced it would forgive roughly $1.2 billion in additional student loan debt for borrowers who work in public service.
Biden cancels $1.2B in student loan debt
The U.S. Department of Education announced on Thursday that 35,000 borrowers, including teachers, nurses, firefighters, and other public servants, will get student debt relief.
Student loan borrowers gather near The White House to tell President Biden to cancel student debt on May 12, 2020 in Washington, DC. (Credit: Paul Morigi/Getty Images for We, The 45 Million)
The announcement brings the total student loan forgiveness under the Biden administration to $168.5 billion for 4.76 million borrowers, according to the Education Department.
RELATED: New student loan forgiveness: $1.2B in debt canceled for these 153,000 borrowers
It added that the latest forgiveness was a result of "needed and long overdue improvements" to the Public Service Loan Forgiveness Program.
The PSLF program was originally passed in 2007. But for years, borrowers ran into strict rules and servicer errors that prevented them from having their debt canceled. The Biden administration adjusted some of the programs rules and retroactively gave many borrowers credits towards their required payments.
Court prohibits implementation of SAVE plan
Two separate legal challenges to Biden's SAVE plan have worked their way through the courts.
In June, federal judges in Kansas and Missouri issued separate rulings that blocked much of the administration's plan to provide a faster path toward loan cancellation and reduce monthly income-based repayment from 10% to 5% of a borrower's discretionary income. Those injunctions did not affect debt that had already been forgiven.
The 10th Circuit Court of Appeals also issued a ruling that allowed the department to proceed with the lowered monthly payments. Thursday's order from the 8th circuit blocks all aspects of the SAVE plan.
The Education Department said it was reviewing the ruling. "Our Administration will continue to aggressively defend the SAVE Plan — which has been helping over 8 million borrowers access lower monthly payments, including 4.5 million borrowers who have had a zero dollar payment each month," the administration said. "And, we won’t stop fighting against Republican elected officials’ efforts to raise costs on millions of their own constituents’ student loan payments."
Survey: 29% of borrowers say student loan debt has influence on their vote
The White House has used existing student loan forgiveness programs to bring more relief to borrowers, a move that could help sway some voters heading into the 2024 election.
A recent Bankrate Student Loans and the Presidential Election Survey found that roughly 29% of people with student loan debt said it will be a key factor in their vote in November.
The survey, conducted between May 16 and May 20, polled 2,407 adults, including 1,033 who had or currently have student loans to pay off.
Bankrate noted that 24% of respondents with student loan debt said they have trouble affording their monthly payments or have skipped at least one monthly payment (24%) since student loan payments resumed after a pandemic pause.
Meanwhile, 25% of people said they had to enroll in a new payment plan, forbearance, or deferment to reduce their monthly costs.
This story was reported from Los Angeles. The Associated Press, Kelly Hayes contributed.