Buying into a Legal Fiction Crafted by the Arch-Conservative 8th Circuit, SCOTUS Denies Tens of Millions of Borrowers’ Rights as Lower Courts Consider Right-Wing Challenges to Affordable Loan Payments
August 28, 2024 | WASHINGTON, D.C. — Today, the U.S. Supreme Court rejected a pair of appeals in ongoing litigation challenging the Biden-Harris Administration’s signature student loan repayment plan, known as the Saving on a Valuable Education Plan or the SAVE Plan. The federal government petitioned the Supreme Court to restore access to the SAVE plan after Republican-appointed judges in the U.S. Court of Appeals for the 8th Circuit temporarily blocked the plan, which had been available to borrowers since September 2023.
As a result of today’s decision, tens of millions of borrowers will be unable to access lower monthly loan payments and 8 million borrowers will continue to have payments paused as lower courts consider legal challenges. These underlying legal challenges, filed in federal courts in Kansas and Missouri by two separate coalitions of right-wing state attorneys general, seek to upend three decades of student loan policy and force millions of borrowers to pay more each month, pay more in interest, and remain in debt for longer.
In response to today’s decisions by the U.S. Supreme Court, Student Borrower Protection Center executive director Mike Pierce issued the following statement:
“In rejecting this appeal, the Supreme Court perpetuates the 8th Circuit’s bogus legal fiction that pausing affordable payments is ‘preserving the status quo.’
“This is ludicrous. Millions of people were repaying their student loans. Now they are in limbo.
“Secretary Cardona owes it to all student loan borrowers to recognize that these right-wing, captured courts will never give them a fair hearing and to use his power to suspend student loan payments, interest charges, and debt collection for all student loan borrowers. It is time to shut it down.”
Earlier this summer, the 8th Circuit issued an order temporarily blocking—in its entirety—the Biden-Harris Administration’s SAVE Plan. The order also blocked aspects of other long-standing Income-Driven Repayment plans on which millions of borrowers rely. This radical action builds on an earlier order by a federal judge in the Eastern District of Missouri that temporarily blocked all debt cancellation under the SAVE plan.
Earlier this week, SBPC filed an amicus brief in the 8th Circuit arguing that the courts erred in these decisions to halt critical avenues of debt relief and that, in effect, the orders cause sweeping, long-term harm to millions of people in a ham-fisted effort to protect the private profits of a single student loan company—MOHELA.
From the brief:
“The financial and social maelstrom that has befallen millions of borrowers makes plain the overwhelming harm to the public caused by the multiple overlapping–and in some cases conflicting–injunctions to the final Rule. As described above, the consequences to borrowers far outweigh the speculative and tenuous harms to the Plaintiffs, which are indirect by means of an unsubstantiated harm to MOHELA.”
The brief argues that by upsetting the status quo—borrowers’ ability to select from several repayment plans the one that best meets their needs—the court orders failed to properly account for the foreseeable chaos and uncertainty that the nearly 8 million borrowers already enrolled in the SAVE Plan would experience, and for the approximately 14 million borrowers who will need to select a plan in the coming weeks if they want to avoid default. These borrowers range from recent graduates entering repayment for the first time, to borrowers who have struggled to make payments since payments resumed last fall and have relied on the federal government’s on-ramp period, to borrowers already in default seeking to re-enter repayment through the Fresh Start program. As the brief explains, the courts failed to take the breadth of their orders’ foreseeable impacts into account.
Further Reading
SBPC blog on 18 state attack on SAVE: The Biden Administration’s Latest Effort to SAVE Borrowers and the States that are Hell-Bent to Stop It
SBPC press release on 8th Circuit ruling: Eighth Circuit Bows to Right-Wing Politicians, Wreaking Havoc on Student Loan System by Blocking President Biden’s SAVE Plan
May 2024 comment supporting student debt relief—which includes a cover letter that spotlights 15 borrower stories, and a petition signed by 22,337 borrowers and nearly 5,000 individual borrower testimonials: See Here
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About Student Borrower Protection Center
Student Borrower Protection Center (SBPC) is a nonprofit organization focused on eliminating the burden of student debt for millions of Americans. We engage in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance racial and economic justice.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.