Federal appeals court blocks all of Biden’s student loan debt handout plan

A federal appeals court on Thursday issued a ruling that blocks the Biden administration from continuing to implement a new version of its student loan debt handout plan that is designed to reduce monthly payments for borrowers.

The U.S. Eighth Circuit Court of Appeals granted a request by seven Republican states to block portions of the Education Department’s plan that a lower court judge hadn’t previously blocked.

Last month, a U.S. District Court in St. Louis blocked the agency from moving forward with granting additional student loan forgiveness under the Biden administration’s Saving on a Valuable Education (SAVE) plan – though it didn’t block all elements of the plan.

The SAVE plan offers more generous terms for borrowers enrolled in income-driven repayment plans by reducing monthly payments for eligible borrowers who meet income criteria and forgiving the debt borrowers whose original principal balances were $12,000 or less after a 10 year period.

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State attorneys general led by Missouri’s Andrew Bailey asked the 8th Circuit to block the rest of the SAVE plan last week after portions of it were put on hold by the district court.

The court granted that request with a one-page ruling that imposed an administrative stay on the remainder of the SAVE plan with Thursday’s ruling.

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Student loan borrowers have lobbied the Biden administration to cancel student loan debt and some have been slow to resume repayment after the COVID pause expired. (Al Drago/Bloomberg via Getty Images / Getty Images)

“The Court granted our emergency motion to BLOCK Joe Biden’s entire illegal student loan plan, which would have saddled working Americans with half-a-trillion dollars in Ivy League debt,” Bailey wrote in a post on X, formerly Twitter. “HUGE win for every American who still believes in paying their own way.”

An Education Department spokesperson told FOX Business, “We are assessing the impacts of this ruling and will be in touch directly with borrowers with any impacts that affect them.” 

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“Our Administration will continue to aggressively defend the SAVE Plan – which has been helping over 8 million borrowers access lower monthly payments, including 4.5 million borrowers who have had a zero dollar payment each month,” the statement continued. “And, we won’t stop fighting against Republican elected officials’ efforts to raise costs on millions of their own constituents’ student loan payments.”

Reuters contributed to this report.