A federal appeals court has dealt a setback to President Joe Biden's student loan repayment plan, known as SAVE (Saving on a Valuable Education). The court sided with Republican-led states seeking to halt further implementation of the plan until their legal challenge is resolved.
The Department of Education had already paused the SAVE plan last month due to ongoing litigation, so the recent ruling does not immediately impact the 8 million borrowers currently enrolled in the program. These borrowers are currently in an interest-free forbearance period, exempt from making monthly student loan payments.
The 8th Circuit Court of Appeals, in a unanimous decision by three Republican-appointed judges, blocked the Department of Education from advancing the SAVE plan while the legal challenges are being reviewed. The court stated that the states challenging the plan have a 'fair chance' of prevailing in the case.
The Biden administration has the option to appeal to the Supreme Court to overturn the latest ruling. The Supreme Court is already considering a separate request related to challenges against the SAVE plan.
SAVE is a significant student loan policy of the Biden-Harris administration, aimed at reducing borrowers' monthly payments and expediting student debt cancellation. The program was introduced following the Supreme Court's rejection of Biden's previous student loan forgiveness initiative last year.
