Touted by Biden as “the most affordable student loan repayment plan ever”, the White House has vowed to keep fighting to help millions of low-income Americans ease their debt.
Not What They Wished For
On Wednesday, one of President Joe Biden’s biggest programs regarding student loan relief failed to remain in effect while Republican-led states are challenging its legality.
Court Said “No”
Based on the Supreme Court’s decision, Biden’s SAVE (Saving on a Valuable Education) program, which would lengthen payment periods and write off outstanding debts of $12,000 or less, remains blocked.
Hooking the Younger Voters
More than 10% of Americans are burdened with federal student debt, making it a significant concern among young voters during elections.
Forgiving student loans formed a significant part of Biden’s 2020 presidential campaign, serving as a concession to progressive supporters who were leaning towards more liberal candidates during the Democratic primary.
Bad Times for Biden
However, the administration has had to battle numerous obstacles, including a critical court ruling last year where the conservative majority of 6-3 determined that Biden had overstepped his authority in his efforts to cancel hundreds of billions in student debt.
Forget About It
Earlier this summer, more than a dozen red states filed lawsuits to block the SAVE program, which was implemented almost one year ago, saying that it will cost at least $475 billion over the next decade.
What’s the Plan?
During Wednesday’s ruling, the court said that it “expects” that the 8th US Circuit Court of Appeals, currently reviewing the challenge to the plan, “will render its decision with appropriate dispatch.”
This indicates the court’s desire for the legal proceedings to unfold in the lower court before intervening on the emergency docket.
Much Too Much
According to the Congressional Budget Office, Biden’s loan-forgiveness plan will cost the country $276 billion.
SAVE was temporarily suspended by the lower courts as the lawsuits progressed through the judicial system.
In an urgent decision, the Supreme Court supported one of those injunctions.
Times Are Tough
Almost $150 billion in debt relief has been approved by Biden to date, impacting nearly 5 million Americans, albeit mostly through executive actions instead of Congress.
Biden himself has referred to SAVE as “the most affordable student loan repayment plan ever.”
Less Stress
Over 400,000 participants, including low-income borrowers, have already had some or all their debts forgiven via SAVE.
Would Have Been Amazing
The program’s second phase was scheduled to further lower payments starting from July 1st, including minimizing low-income participants’ bills by 50%.
What About the Impact?
The approximately 8 million borrowers currently participating in SAVE won’t be impacted immediately by Wednesday’s ruling.
It Didn’t Last Long
The repayment plan was established by the Department of Education last year, following the Supreme Court’s decision to invalidate Biden’s broader, one-time student loan forgiveness initiative.
Actually Helping People
SAVE would have a significant effect on millions of Americans’ monthly payments.
The program changes the method by which a borrower’s income is calculated, mandating that they contribute 5% of their discretionary income towards undergraduate loans instead of the previous 10% requirement.
A Dream for Those in Debt
Additionally, the interest cannot exceed the total of the monthly payment.
And after 10 years, borrowers with an initial debt of $12,000 or less may have their loans canceled.
Was This Biden’s Best One?
Thus, SAVE, which is currently the most generous student loan repayment plan in the government, would see low-income borrowers’ debt minimized much faster than on any other repayment plan.
Now We Wait
So, while courts evaluate two legal disputes, the fate of the program remains uncertain.
Recently, Alaska, South Carolina, and Texas petitioned the Supreme Court to uphold a partial suspension of the program while the states continued a more extensive legal challenge against it.
In a separate ruling on Wednesday, that appeal was also rejected by the court.
It’s Not Over
Following Wednesday’s court decision, the White House promised to “continue to aggressively defend the SAVE Plan.”
As per the Biden administration, SAVE has so far helped 4.5 million student borrowers enjoy a “zero dollar payment each month.”
Red vs. Blue… Again
In his statement, White House spokesman Angelo Fernández Hernández said: “We won’t stop fighting against Republican elected officials’ efforts to raise costs on millions of their own constituents’ student loan payments.”
Calling Kamala
Vice President Kamala Harris has also stepped in, promising to keep “fighting” for the cancellation of student debt.
In her Wednesday evening statement on social media, Harris wrote: “@POTUS and I have canceled nearly $170 billion in student debt for almost 5 million Americans.”
Fighting for Americans
She also added: “We are also fighting to defend our SAVE Plan, which has lowered payments for millions of Americans. We won’t stop fighting to build an economy that works for every American.”
21 Illegal Household Items You Might Be Unknowingly Keeping
You might think your home is your safe haven, but could it also be a cache of contraband? Are you unknowingly breaking the law with items tucked away in your drawers or closets? 21 Illegal Household Items You Might Be Unknowingly Keeping
VA to Axe 10,000 Employees Amid $11M Scandal Fallout
The VA is under fire after a damning report revealed the department is trying to rid itself of almost 10,000 staff members while trying to keep the lid on a multi-million dollar scandal. VA to Axe 10,000 Employees Amid $11M Scandal Fallout
End of an Era: 18 All American Firms Closing Doors in the US
American retail and dining is changing irreversibly. Iconic stores and restaurants that once defined the vibrancy of community life are now fading memories, leaving behind empty storefronts and a sense of loss. End of an Era: 18 All American Firms Closing Doors in the US
Featured Image Credit: Shutterstock / Evan El-Amin.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
The images used are for illustrative purposes only and may not represent the actual people or places mentioned in the article.
