Supreme Court Being Dicks Again, This Time On Student Loans (Again)
Supreme Court Being Dicks Again, This Time On Student Loans (Again)
Biden's SAVE student debt repayment plan remains in limbo, even without toga.
The US Supreme Court yesterday refused to grant the Biden administration’s emergency motion to allow the president to lower people’s student loan payments — as the administration has been for the past year — while the case is litigated in a federal appeals court.
Biden’s Saving on a Valuable Education (SAVE) income-driven debt repayment plan, rolled out in August 2023, was designed to fix a lot of the worst aspects of student loans, and had already wiped out student debt for more than 414,000 borrowers. But then two separate court cases this June from red state attorneys-general claimed SAVE was entirely too awesome, and that Biden couldn’t implement it without explicit authorization by Congress. Yep, it’s that fake bullshit “Major Questions” doctrine that the Roberts Court pulled out of its ass with no basis in law or precedent a few years back.
The Eighth Circuit Court of Appeals then froze the entire SAVE program earlier this month. Yesterday’s order by the Supremes left that injunction in place, meaning that no more loans can be forgiven under SAVE, and the administration can’t go forward with additional payment-reducing features while the appeal is litigated in the Eighth Circuit.
Worse, as Chris Geidner notes in in his indispensable Law Dork newsletter, the Eighth Circuit’s injunction is so broad that it just might prevent the processing of loan forgiveness under another income-driven repayment plan, the REPAYE program. Isn’t having a judiciary that’s constantly overturning settled law fun? It’s like the Joker was running a court system. Maybe your student loan balance will be erased like you thought it would. Maybe your loan servicer will send a poisonous snake in your next statement. (Honestly, I wouldn’t put that past Navient.)
The brief order continuing the Eighth Circuit’s freeze on SAVE was unsigned, as is common in such orders, and offered no reasons for the order apart from noting that “The Court expects that the Court of Appeals will render its decision with appropriate dispatch,” after which that decision will presumably be appealed right back up to the Supremes, possibly in time to hear it before the election, but presumably not, as that is what, 67 days?
Just to remind you what’s being frozen here — and likely to be killed entirely once the case gets back to the Supreme Court, because the Constitution doesn’t allow Americans to have nice things — the SAVE repayment plan was proposed well in advance of the June 2023 case where the Court threw out Biden’s first proposed broad-based debt relief plan.
SAVE was conceived as an improvement on existing Income-Driven Repayment (IDR) plans, which were authorized by Congress under the Higher Education Act. It allows folks who meet certain income limits to pay a portion of their monthly incomes — and it caps that at five percent of disposable income instead of the previous 10. After a fixed period of time — 20 years for most undergraduate loans — the remaining balance on the debt is forgiven. (There’s also the popular Public Service Loan Forgiveness (PSLF) program, which discharges the remaining balance after 10 years of payments. Happily, it doesn’t appear to be affected by this lawsuit, since Congress specifically authorized PSLF during the GW Bush administration, and nobody’s figured out how to claim that exceeded Education Department authority.)
SAVE supercharged the IDR process by offering lower monthly payments for most borrowers, along with a provision (now blocked) that would have cut many monthly payments in half starting this year. Lots of borrowers making less than about $30,000 annually would have had monthly payments of zero.
The plan also prevented interest from piling up on the loans by just plain not charging any interest beyond the amount covered by the monthly payment, eliminating the interest-accumulating hamster wheel that led so many student loans to balloon far beyond the original loan balance. Jesus, that was a great feature.
SAVE also moved borrowers more quickly to the payment threshold needed to forgive the loan balance, allowing relatively small loan balances to get there well before 20 years, discharging balances under $12,000 after only 10 years.
The lawsuits from red states argued that SAVE was far more generous to borrowers than the Higher Education Act allowed, and Missouri gained standing by insisting its state-run loan processing agency, MOHELA, would be harmed by not making money processing student loan payments if those loan balances went away. Yes really.
Obviously, this case is just one more example of the Trumpist Right’s far-reaching assault on 1) the basic fucking ability of executive branch agencies to do their goddamn jobs; and 2) Biden’s Education Department in particular, since it has committed the unpardonable sin of taking action to help younger, less wealthy people escape the endless cycle of student debt.
Politically, attacking student debt relief also promotes the Right’s endless culture wars, since college graduates are more likely to vote for Democrats — shockingly, this wasn’t always the case! — and everything about higher education pisses off the Right anyway. After all, the only people who go to college are woke America haters who all major in gender studies and then look down on Real Americans while eating avocado toast, this is simply a proven fact. There’s a reason that Trump loves the poorly educated: They voted him into office and keep sending him their money even now.
There is precisely one good (ish) thing about this mess, which is that after SAVE was partially frozen by the June circuit court decisions, the Education Department put all affected loans into interest-free forbearance until the case is finally resolved, which could take a while. Yr Wonkette is not a financial advisor, but it seems to us that borrowers left up in the air by all this judicial fuckery might find this a good chance to pay down some of their balance, if they can, since anything they pay now will go entirely to the balance, not interest.
And for fuckssake, let’s elect Kamala Harris and a Democratic majority in Congress so they can turn SAVE into legislation, taking that bullshit “major questions” complaint off the table.
PREVIOUSLY!
[NBC News / WaPo (gift link) / NYT (gift link) / Law Dork]
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Another option, if you are in forbearance, is to put that money towards other debt like credit cards, which may be much higher than your student loan interest. Pay off the most expensive debt first.
Ta, Dok. My higher education was almost all self-administered, so I have no student loans to repay. I did go to holistic health school and paid for it. I did borrow some money to do so, and paid it all back. However, I do believe the SAVE act should be saved.