Judges Block Parts of Biden’s New Student Loan Forgiveness Plan with Dual Court Rulings—What’s Next?

Joe Biden

President Biden’s new student loan repayment plan faces uncertainty following injunctions from two federal judges on Monday, halting further implementation and loan forgiveness pending lawsuits challenging the policy. The rulings raise questions about enrollment and loan cancellation for millions of affected borrowers.


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Lawsuits Against Student Loan Forgiveness Plan

Depositphotos 638156506 L Joe Biden Photo by thenews2.com
Depositphotos Photo by thenews2.com

In late March, 11 Republican-led states filed a lawsuit against the Biden administration’s student loan debt forgiveness plan,

The SAVE plan emerged after the Supreme Court last year rejected a broader debt relief effort by the Biden administration under its pandemic-era plan, which aimed to erase up to $20,000 in student debt for about 43 million borrowers.

Kansas Judge Halting Final Phase on SAVE Program

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In Kansas, U.S. District Judge Daniel D. Crabtree halted the Biden administration from implementing the final phase of the Saving on a Valuable Education program, known as SAVE. Undergraduate borrowers were poised to see their payments reduced by half starting in July—from 10 percent to 5 percent of income above 225 percent of the federal poverty line. Similarly, borrowers with graduate loans would have experienced reduced payments based on a weighted average between 5 percent and 10 percent. This aspect of the program, launched in October, will remain on hold pending litigation.

Judge Crabtree, appointed by President Barack Obama, criticized the Education Department for not clearly demonstrating that Congress authorized the repayment plan initiated by the Biden administration in 2023. He emphasized the program’s significant economic impact, estimated at $230 billion over the next decade by the Congressional Budget Office, as necessitating congressional oversight.

The ruling follows Crabtree’s recent assessment that eight of the 11 states challenging the repayment plan failed to adequately prove how they would be adversely affected. He singled out Alaska, Texas, and South Carolina as states that successfully argued the plan could harm their tax revenue. Conversely, he dismissed arguments from Kansas, Idaho, Alabama, Louisiana, Montana, Utah, Nebraska, and Idaho.

Separate Ruling Against Biden Loan Forgiveness in Missouri

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In a separate ruling in Missouri, U.S. District Judge John A. Ross barred the Education Department from forgiving additional loans under the SAVE plan. This decision marks a victory for Missouri Attorney General Andrew Bailey, who led a coalition of six states in April to challenge the program.

Bailey argued that the Missouri Higher Education Loan Authority, a quasi-state agency servicing federal student loans and funding state scholarships, loses revenue when Direct Loans—those owned by the federal government—are forgiven. This argument echoed claims in the lawsuit that dismantled Biden’s debt relief plan and contributed to advancing this lawsuit, bolstering the case to halt further debt relief under the program.

Ross, also appointed by President Obama, questioned whether Congress envisioned such a comprehensive loan repayment plan as the one created by the Biden administration in 2023, indicating potential jeopardy for the SAVE plan’s future.

States Standing Questioned by Biden Administration

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The judge also denied the Biden administration’s attempt to dismiss the case, stating that the suing states had standing and “are likely to succeed on the merits of their argument that the early loan forgiveness provisions…were promulgated in a manner exceeding the Secretary of Education’s statutory authority.”

Joe Biden has faced criticism from Republicans who accuse him of shifting the burden to taxpayers and undermining the Supreme Court, which blocked the White House’s student loan forgiveness plan last year.

Missouri State Attorney General Applauds Ruling

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Missouri State Attorney General Andrew Bailey, representing one of the seven states that brought the lawsuit said, “By attempting to saddle working Missourians with Ivy League debt, Joe Biden is undermining our constitutional structure, Only Congress has the power of the purse, not the President. Today’s ruling was a huge win for the rule of law, and for every American who Joe Biden was about to force to pay off someone else’s debt.”

Arkansas State Attorney General Voices Support

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Arkansas Attorney General Tim Griffin said: “With Independence Day fast approaching, another court has reminded President Biden that he is not a king. He can’t go around Congress and unilaterally cancel student loans. He should have learned that from Schoolhouse Rock!”

The other states involved in the lawsuit include Florida, Georgia, North Dakota, Ohio, and Oklahoma.

Partial Victory For States

Bipartisan Observations on Infrastructure Act in New York City. January 31, 2023, New York, USA: US President Joe Biden delivers a speech and discusses topics related to the Bipartisan Infrastructure Act and how it would help with traffic and transportation at the Long Island Railroad West Side Train Yard in New York on Tuesday (31). Credit: Kyle Mazza/TheNews2 (Foto: Kyle Mazza/TheNews2/Deposit Photos)
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In their lawsuit, the states requested the judge to declare that the program breached the separation of powers outlined in the Constitution.

However, Judge Ross noted that other elements of the program, such as reducing monthly payments and limiting interest accrual, are providing benefits to borrowers and can proceed. He added that the suing states “have not demonstrated that these provisions cause them harm.”

Two parts of the SAVE plan will be on pause until the cases are fully litigated.


Monthly Student Loan Forgiveness Announcements

Joe Biden
President of the United States Joe Biden’s speech on the economy. September 14, 2023, Largo, Maryland, USA: The US President Joe Biden delivered remarks on Thursday (14) afternoon on Bidenomics at Prince George’s Community College in Largo, Maryland. Credit: Jack Marain/TheNews2 (Foto: Jack Marain/Thenews2/Deposit Photos)

With the November election approaching, the administration has been keen to highlight its progress in debt cancellation programs, making similar announcements almost monthly.

In April, the administration announced another round of cancellations totaling $7.4 billion for 277,000 borrowers.

On May 1st, the Biden administration has announced the cancellation of $6.1 billion in student loans for 317,000 borrowers who attended The Art Institutes.

On 22nd May, the cancellation of an additional $7.7 billion in student loans was announced.


$167 Billion in Loans Forgiven So Far

Joe Biden
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Including the latest forgiveness action, the administration has now cancelled over $167 billion in debt for almost 4.7 million borrowers which amounts to 10% of all outstanding student loan debt and an average of $34,783 per student.

Biden Plans To Offer More Student Loan Forgiveness

US President Joe Biden delivers remarks at National Action Network Martin Luther King, Jr. Day Breakfast. January 16, 2023, Washington, DC, USA: President of the United States Joe Biden addressed attendees on Martin Luther King, Jr. Day and commented on Republicans saying that they are fiscally demented. President Biden also commented on police and social justice. Credit: Kyle Mazza/TheNews2 (Foto: Kyle Mazza/TheNews2/Deposit Photos)
Foto: Kyle Mazza/TheNews2/Deposit Photos

The Biden Administration introduced broader student debt relief proposals set to take effect this fall impacting 30 million borrowers.

Biden’s recent proposal for student loan forgiveness is advancing as a proposed regulation, presenting him with a renewed opportunity to rally young voters for the upcoming November election.

The Education Department had filed paperwork for the new regulation on April 16th, 2024 kickstarting the 30-day public comment period which ended on Friday, May 17th 2024.

The Department of Education will spend a few weeks reviewing the feedback and then publish a final ruling. Biden’s plan would use the 1960s-era Higher Education Act to offer forgiveness to several categories of borrowers, marking a significant step towards implementing the announced loan cancellation sidestepping Congress following the Supreme Court’s rejection of the administration’s initial proposal last year.

Biden’s New Student Loan Forgiveness Plan Estimated To Cost $84 Billion, Adding To The Already Massive $475 Billion

President of the United States Joe Biden's speech on the economy. September 14, 2023, Largo, Maryland, USA: The US President Joe Biden delivered remarks on Thursday (14) afternoon on Bidenomics at Prince George's Community College in Largo, Maryland. Credit: Jack Marain/TheNews2 (Foto: Jack Marain/Thenews2/Deposit Photos)
Credit: Jack Marain/TheNews2 (Foto: Jack Marain/Thenews2/Deposit Photos

The Biden administration has consistently canceled student loans using a variety of existing programs while also pursuing a broader one-time cancellation plan. This approach builds on a proposal that was struck down by the Supreme Court last year but utilizes different legal strategies.

How Much Does It Cost?

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A recent analysis by the Penn Wharton Budget Model (PWBM) suggests that Biden’s new student debt relief plan could incur approximately $84 billion in costs if put into action. This amount is in addition to the $475 billion previously estimated for Biden’s prior SAVE plan.

The report states “We estimate that the New Plans will cost $84 billion in addition to the $475 billion that we estimated for President Biden’s SAVE plan, for a total cost of about $559 billion across both plans.”

The New Plans contain 5 main provisions

#1 Waived Accrued and Capitalized Interest

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Up to $20,000 in interest  will be waived, irrespective of borrower’s income levels. Single individuals earning under $120,000 or couples earning under $240,000 annually are eligible for a complete waiver of all balances exceeding the initial balance under any Income-Driven-repayment (IDR) plan. No application is necessary as automatic relief will be applied.

Estimated cost of $57.75 billion

#2 Forgiving Student Debt For Borrowers In Repayment For 20 Years

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Those who began repaying loans on or before July 1, 2005 (or July 1, 2000 for those with graduate debt) will have all undergraduate debt eliminated. No enrollment in IDR plans is necessary for this relief, although other application requirements for borrowers are yet to be clarified.

Estimated cost of $19.07 billion

#3 Automatic Debt Relief

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Automatically relieving debt for eligible borrowers not enrolled in specific forgiveness programs. Those who meet forgiveness criteria but aren’t enrolled will benefit from favorable repayment rules, including those of the SAVE plan or closed school discharge. No application is required as automatic relief will be applied.

Costs already included as part of the prior SAVE loan forgiveness.

#4 Assisting Borrowers From Low Value Programs or Institutions

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Debt relief will be extended to those who accrued debt from programs or institutions that did not provide “sufficient value” in terms of post-graduation earnings.

Not enough details have been provided by the administration to calculate the cost.

#5 Loan Repayment Hardships

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Relief will be tailored to each borrower’s situation, though whether it will cover partial or full debt is unspecified. The department’s hardship proposal aims to provide loan cancellation to borrowers facing a high risk of loan default. Additional details are pending on this proposal.

Breakdown of the Budget Cost Estimates

US President Joe Biden attends an event in the state of Pennsylvania. August 30, 2022, Wilkes Barre, Pennsylvania, USA: US President Joe Biden speaks on security and firearms during an event in Wilkes Barre, Pennsylvania, on Tuesday (30), the first of three trips to this key election state. November legislatures. The Democrat wants to send a message of firmness against crime and promises new reforms to the arms laws. Credit: Kyle Mazza/Thenews2 (Foto: Kyle Mazza/TheNews2/Deposit Photos)
Depositphotos Photo by thenews2.com

The Penn Wharton Budget Model breaks down the budgetary impact of each of the 5 provisions including the number of individuals benefitting along with their average household income.

One of the biggest criticisms of the New Plan is the benefit provided for about 750,000 households making over $312,000 in average household income.


Ranking Member Cassidy Slams Biden’s Backup Student Loan Scheme

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Sen. Bill Cassidy, R-La., the ranking member of the Senate Health, Education, Labor and Pensions Committee said, “The Supreme Court already ruled the Biden administration doesn’t have the authority to unilaterally take student debt from those who willingly took it on and transfer it to taxpayers who chose not to go to college or already worked to pay their loans off. Now, the Department of Education is completely rewriting the Higher Education Act piece by piece to resurrect this unconstitutional student loan scheme. Where is the relief for the guy who didn’t go to college but is working to pay off the loan on the truck he takes to work? What about the woman who paid off her student loans, but is now struggling to afford her mortgage? Instead, the Biden administration is sticking these Americans with the bill of someone else’s student debt.”

Public Opinion Does Not Favor Biden On Student Loan Debt

Republican Candidate Donald Trump Democratic Candidate Joe Biden
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A new poll from the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research reveals that three in ten U.S. adults approve of how President Biden has handled student loan debt, while four in ten disapprove, with the remaining respondents either neutral or uncertain.

The outlook is similarly bleak among those with unpaid student loans, whether for themselves or a family member.

Court Challenges Ahead

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The U.S. Supreme Court struck down a student loan cancellation proposal last year. The court determined that the post-9/11 HEROES Act, which permits the federal government to waive student loans during emergencies, was not designed to provide universal loan forgiveness.

Utilizing a different legal basis, Biden Administration’s new proposal aims to forgive loans for over 25 million Americans. Opponents view it as unjust burden for taxpayers and have vowed to contest it legally.

What the Rulings Mean For Student Loan Borrowers

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Two aspects of the SAVE plan will be halted until the cases are fully resolved.

The Biden administration cannot proceed with canceling additional federal student debt for borrowers enrolled in the SAVE plan. This program allows borrowers to qualify for debt forgiveness after making at least 10 years of payments. So far, $5.5 billion has been forgiven for 414,000 participants in SAVE.

Additionally, the Biden administration will be prevented from implementing further provisions of the SAVE plan. Many were expecting their payments to be reduced starting in July, but it is now uncertain whether these reductions will take place.

Borrowers currently enrolled in SAVE can continue with the plan as the cases proceed through the legal process.

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Social Security Projected to be Insolvent by 2035, Medicare by 2036

Social Security and Medicare
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The Trustees of Social Security and Medicare unveiled their yearly financial forecasts for both programs, looking ahead over the next 75 years. The newly released projections for Social Security paint a grim picture of rapid progression towards insolvency in 10 years, underscoring the urgent need for trust fund remedies to avert widespread benefit reductions or sudden adjustments in taxes or benefits.

Social Security Projected to be Insolvent by 2035, Medicare by 2036


National Debt Exceeds Previous Projections, Signaling Troubling Times Ahead for the U.S. Economy as per CBO March report

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The Congressional Budget Office (CBO) performs nonpartisan analysis for the U.S. Congress. The latest Budget and Economic Outlook released March 2024, offered dire projections for the country’s fiscal and economic landscape over the upcoming decades. Unfortunately the national debt is higher than initially anticipated and is projected to hit $141 trillion by 2054.

National Debt Exceeds Previous Projections, Signaling Troubling Times Ahead for the U.S. Economy as per CBO March report

The 10 States Taxing Social Security in 2024 and the 2 That Just Stopped

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As 2023 tax filing season draws to a close, retirees across the nation are adjusting their financial plans for 2024, but a crucial detail could drastically alter the landscape of retirement living: the taxing of Social Security benefits. While many bask in the belief that their golden years will be tax-friendly, residents in nine specific states are facing a reality check as their Social Security benefits come under the taxman’s purview. Conversely, a wave of relief is set to wash over two states, marking an end to their era of taxing these benefits. This shift paints a complex portrait of retirement planning across the U.S., underscoring the importance of staying informed of the ever changing tax laws. Are you residing in one of these states? It’s time to uncover the impact of these tax changes on your retirement strategy and possibly reconsider your locale choice for those serene post-work years. Here are the states taxing social security benefits.

The States Taxing Social Security in 2024 and the 2 That Just Stopped

Top 10 Cities Where Home Sellers Are Losing Big, With San Francisco Seeing 20% Take a Loss, Quadruple the National Average

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In San Francisco, a significant number of home sellers are experiencing financial losses at levels not seen in over a decade. This uptick in losses can be attributed to home prices normalizing after a period of steep increases. Currently, nearly 20% of sellers in the city are selling their homes for less than their purchase price, with average losses around $155,500. In contrast, the national scene is less bleak, with only 4% of home sellers across the United States facing losses, as home prices generally continue to hover near peak levels. The typical loss for those unlucky few is about $40,000. Redfin conducted an analysis of the top 50 metros to narrow down the cities where the seller sold the home for less than they bought it for. Here are the top 10 cities where home sellers are facing losses

Top 10 Cities Where Home Sellers Are Losing Big, With San Francisco Seeing 20% Take a Loss, Quadruple the National Average

Retire Abroad and Still Collect Social Security? Avoid These 9 Countries Where It’s Not Possible

Social security benefits
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Dreaming of retiring to a sun-drenched beach or a quaint village? Many Americans envision spending their golden years abroad, savoring the delights of new cultures and landscapes. However, an essential part of this dream hinges on the financial stability provided by Social Security benefits. Before packing your bags and bidding farewell, it’s crucial to know that not all countries play by the same rules when it comes to collecting these benefits overseas. Here are the nine countries where your dream of retiring abroad could hit a snag, as Social Security benefits don’t cross every border. Avoid living in these countries so your retirement plans don’t get lost in translation.

Retire Abroad and Still Collect Social Security? Avoid These 9 Countries Where It’s Not Possible

Americans Are Teetering on the Edge of Financial Strain As 1 in 5 Users Is Maxed-Out

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In its Quarterly Report on Household Debt and Credit for the first quarter of 2024, the New York Fed’s Center for Microeconomic Data highlighted a concerning trend: more borrowers are falling behind on credit card payments. 1 out of every 5 borrowers is maxed-out.

Americans Are Teetering on the Edge of Financial Strain As 1 in 5 Users Is Maxed-Out

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