The Supreme Court could weaken President Joe Biden after three states asked the supreme court to block his student debt relief plan. Alaska, South Carolina and Texas filed a lawsuit Tuesday urging the Supreme Court to overturn a ruling by the U.S. Court of Appeals for the Tenth Circuit that allowed much of Biden’s plan to proceed.
According to the plaintiff states, this action seeks to prevent approximately 3 million Americans from seeing their monthly payments increased under the “Saving for a Valuable Education” program.
“Today, 8 million Americans are enrolled in SAVE, and 3 million expected to receive lower payments this month due to the program being fully implemented,” the states said in their filing.
How the Supreme Court Could Harm Student Borrowers
The dispute centers on the legality of the new plan, seen by the states as being as questionable as President Biden’s first large-scale student loan forgiveness program, which was struck down by the Supreme Court earlier.
“Due to the intransigence of the Administration, unfortunately the Court must intervene again,” the states added. Prior to this request, several federal judges ruled against Biden’s income-based payment program, known as Saving on a Valuable Education (SAVE).
This program had significantly reduced or even eliminated monthly payments for millions of federal student loan borrowers. Despite the successful cancellation of $5.5 billion in federal student debt for more than 400,000 borrowers, according to the Department of Education, recent court decisions have put SAVE’s continuation on pause.
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What Comes Next for Student Loan Borrowers
The U.S. Court of Appeals for the Tenth Circuit provisionally suspended one of the rulings, leaving the fate of the program uncertain in the coming months.
Michael Lux, a lawyer and founder of Student Loan Sherpa, commented, “I think there is a realistic possibility that both provisions will eventually be overturned. The district court judges, appointed during the Obama era, appear to be acting on legal grounds rather than political ones.”
If the SAVE program goes ahead, the Biden administration estimates it will benefit more than 20 million borrowers, while plaintiff states express concerns about the potential cost to the public, which could run into hundreds of billions of dollars.
“These three states rightly argue that this type of loan forgiveness presents difficult legal challenges and could cost taxpayers, including those who have not applied for student loans, millions of dollars,” said Alex Beene, an instructor of financial literacy at the University of Tennessee at Martin.
Amid the uncertainty, Beene warned of the need for national consistency in student debt policies to avoid confusion and additional financial hardship for borrowers.
“The current back and forth in policies generates more uncertainty and makes it difficult for borrowers to plan financially,” Beene concluded.
Lux said the court process has been “terribly frustrating” for borrowers, urging them to wait while SAVE’s provisions face judicial review.