U.S. Appeals Court Rejects Biden Administration’s Student Debt Relief Program
St. Louis, Missouri – On Tuesday, February 14, 2023, the U.S. Court of Appeals for the 8th Circuit ruled against the Biden administration’s student debt relief program, holding that the Education Department lacked the authority to implement the program.
Background
The program, known as the "Saving on a Valuable Education (SAVE) Plan," was designed to reduce monthly payments and expedite loan forgiveness for millions of student loan borrowers. It provided more generous loan repayment terms, including monthly payments as low as $0 for some borrowers and debt forgiveness in as little as 10 years for certain smaller loans.
Legal Challenge
Seven Republican-led states, led by Missouri Attorney General Andrew Bailey, sued to block the program, arguing that the Education Department exceeded its authority under the Higher Education Act (HEA). The plaintiffs maintained that the HEA only authorized repayment plans that ultimately led to the full repayment of student loans, not their forgiveness.
Court’s Ruling
A three-judge panel of the 8th Circuit Court of Appeals agreed with the plaintiffs. In an opinion written by U.S. Circuit Judge L. Steven Grasz, appointed by former President Donald Trump, the court held that the HEA "textually forecloses the Department’s construction that it may use its authority to implement an income-driven repayment plan to effect mass student loan forgiveness."
Judge Grasz emphasized that the HEA "unambiguously limits" the Education Department’s authority to income-based repayment plans that "lead to actual repayment of student loans." He concluded that the SAVE Plan went "well beyond this authority" by designing a program where loans were "largely forgiven rather than repaid."
Reactions
Attorney General Bailey hailed the ruling as a victory for taxpayers, stating that it prevented "a president [from] forcing working Americans to foot the bill for someone else’s Ivy League debt."
James Bergeron, recently appointed deputy under secretary at the Education Department under President Trump, said the ruling "affirmed what we’ve known all along: the Biden administration misled students into believing their debt would simply disappear."
Impact
The 8th Circuit’s ruling is a significant setback for the Biden administration’s efforts to address the student debt crisis. It follows the U.S. Supreme Court’s ruling in 2023, which blocked the administration’s earlier plan to cancel $430 billion in student loan debt.
Despite the legal setbacks, the Biden administration has expressed its commitment to finding other ways to provide student debt relief. However, the 8th Circuit’s ruling casts doubt on the administration’s ability to pursue broad-based loan forgiveness programs without further congressional authorization.
Conclusion
The 8th Circuit’s ruling is a major blow to the Biden administration’s ambitious student debt relief agenda. The court’s holding that the Education Department lacked authority to implement the SAVE Plan highlights the limits of executive action in addressing complex policy issues. The ongoing legal challenges underscore the need for a comprehensive and sustainable solution to the student debt crisis, one that balances the interests of borrowers, taxpayers, and higher education institutions.
