Biden administration urges Supreme Court to reinstate student loan relief plan in emergency appeal

The Biden administration filed an emergency appeal Tuesday at the Supreme Court urging the justices to reinstate the president’s latest student loan relief plan. 

The appeal asks to temporarily lift a lower court ruling that currently prevents President Biden from implementing his Saving on a Valuable Education (SAVE) Plan, which would lower student loan payments for millions of borrowers. 

“The rule is a straightforward exercise of the Department’s express statutory authority to set the parameters of income-contingent repayment plans — just as it has done for three decades,” U.S. Solicitor General Elizabeth Prelogar wrote to the justices. 

If the Supreme Court is not inclined to intervene on their emergency docket, Prelogar alternatively requested the justices take up the legality of the plan on the merits and expedite consideration so oral arguments can be held this fall. 

The court ordered the SAVE Plan’s challengers to respond by Monday afternoon.

The posture mimics how the Biden administration handled challenges to its earlier student debt plan, which would’ve forgiven at least $10,000 in debt relief to individual borrowers.  

Last year, the Supreme Court struck down that plan in a 6-3 vote along ideological lines after agreeing to take up the matter in full once it received a demand for emergency action from the Justice Department. 

The SAVE plan was first introduced after the Supreme Court’s decision.  

Its first phase began last fall, raising the income protected from payments from 150 percent above the federal poverty guidelines to 225 percent and waiving accrued unpaid interest outside the calculated payments.   

The second phase was set to begin in July, dropping payments on undergraduate loans from 10 percent of discretionary income to 5 percent and other loan forgiveness options for certain groups.  

The millions of Americans who signed up for the new income-driven repayment program had their loans put in forbearance by the Department of Education until the plan makes is way through the legal system, leaving borrowers in limbo yet again.  

The Penn Wharton Budget Model estimates the SAVE plan would cost $475 billion over 10 years. 

It has come under two legal challenges filed by separate groups of Republican state attorneys general, which each assert the large price tag requires clearer authorization from Congress.  

In the first case, seven states — Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma — convinced the 8th U.S. Circuit Court of Appeals on Friday to issue an injunction temporarily blocking the SAVE Plan until it resolves the case. 

Tuesday’s emergency appeal asks the Supreme Court to lift that ruling as the lawsuit proceeds. The Biden administration urged the justices to meanwhile deny an emergency appeal filed by the challengers in the second lawsuit. 

In that case, Alaska, South Carolina and Texas last month urged the Supreme Court to temporarily block key portions of the SAVE Plan. The request has been fully briefed since July 19, but the justices have yet to act on it. 

Once the 8th Circuit halted the SAVE Plan on Friday, the three states in a letter to the justices wrote that “there is sufficient overlap to negate the need for emergency relief.” 

But they went on to make a bold request: take up the legality of the plan on the merits and immediately strike it down without hearing oral arguments.  

Without the Supreme Court’s intervention, the states said, “it is increasingly plain that the federal government will continue to try give away nearly a half-trillion dollars of the public’s money.” 

—Updated at 5:57 p.m.