A US appeals court ruled on Tuesday that Democratic former President Joe Biden’s administration lacked the authority to pursue a student debt relief program aimed at lowering monthly payments for millions of borrowers and expediting loan forgiveness for some.
The 8th United States Circuit Court of Appeals in St. Louis ruled in favour of seven Republican-led states that sued to block the Education Department’s program, whose future was already uncertain with President Donald Trump back in office.
The three-judge panel ruled that the Education Department went beyond its authority by attempting to use a Higher Education Act provision that allows for income-based loan repayment plans to implement debt forgiveness on the scale provided by Biden’s Saving on a Valuable Education (SAVE) Plan.
That program was designed to offer more generous terms than previous income-based repayment plans, with some borrowers’ monthly payments dropping to as low as $0.
It also allowed debt forgiveness for some smaller loans in as little as 10 years, as opposed to the previous rules’ 20- or 25-year timelines.
U.S. Circuit Judge L. Steven Grasz, appointed by Trump during his first term, stated that the Higher Education Act’s text made it clear that Congress only authorised repayment plans that resulted in actual repayment of student loans.
Grasz, who was joined by two other Republican-appointed judges, stated that the Biden administration had “gone well beyond this authority by designing a plan where loans are largely forgiven rather than repaid.”
Missouri Attorney General Andrew Bailey, a Republican who led the litigation, stated on X that while Biden is no longer in office, “this precedent is imperative to ensuring a president cannot force working Americans to foot the bill for someone else’s Ivy League debt.”
In a statement, James Bergeron, who was recently named acting under secretary at Trump’s Education Department, said the department is working to ensure borrowers understand existing repayment options.
The judge’s decision “affirmed what we have known all along: the Biden administration misled students into believing their debt would simply disappear, despite the law being clear that a taxpayer-funded bailout is blatant executive overreach.”
The decision was another legal setback for Biden’s efforts to address what his administration described as a broken student debt system that can financially burden Americans seeking higher education.
In 2023, the US Supreme Court’s 6-3 conservative majority blocked Biden’s earlier plan to cancel $430 billion in student loan debt, which was intended to benefit up to 43 million Americans and fulfil a campaign promise.
Following that decision, Biden’s administration sought to continue providing student debt relief in other ways, announcing $183.6 billion in loan forgiveness for more than 5 million borrowers by the time he left office.
