The Eighth Circuit Court has issued an injunction blocking key aspects of the federal government’s SAVE student loan forgiveness plan, replacing an earlier stay with a more specific order that outlines prohibitions that will remain in effect until a final ruling is made or the Supreme Court intervenes. This decision comes after the Department of Education’s SAVE plan faced legal challenges and opposition from several states, ultimately resulting in the court halting certain elements of the program while the legal battle continues. The injunction prohibits the forgiveness of principal or interest, prevents interest from accruing on loans, and disallows borrowers from making very low or $0 monthly payments based on their income. The ruling is set to remain in effect until further notice from the Eighth Circuit or the U.S. Supreme Court.
Supreme Court to reinstate injunction on SAVE student debt relief plan
The spokesperson also stated that the Biden administration remains committed to providing assistance and relief to borrowers nationwide, despite facing opposition from Republican lawmakers.
According to the Education Department, $5.5 billion has already been distributed to 414,000 borrowers under the SAVE plan.
While the administration predicts that the program will cost taxpayers $156 billion over ten years, Republican attorneys general argue that the actual cost could reach $475 billion.
On Aug. 9, the Eighth Circuit referenced a budget model by the Wharton School of the University of Pennsylvania, which projected a $475 billion cost for the program. The court supported a Kansas district court ruling that criticized the Biden administration for significantly expanding the income-driven repayment plans from a $15 billion program to a $475 billion initiative, stating that this expansion altered agency authority.
