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Courts Block Biden’s Student Loan Cancellation Plan: A Win for Taxpayers

Posted on Monday, July 1, 2024
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by Outside Contributor
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On June 24, two federal court judges issued nationwide injunctions stopping the Biden administration from illegally canceling hundreds of billions of dollars in student debt. This scheme, the Saving on a Valuable Education, or SAVE, Plan, is the latest lawless loan redistribution attempt to fail in court.

Background

President Joe Biden finalized SAVE via an administrative regulation less than two weeks after the Supreme Court struck down his initial attempt at mass student loan cancellation through the HEROES Act. There, Biden had unlawfully attempted to cancel up to $10,000 each for borrowers earning less than $125,000 annually, or up to $20,000 if they had ever received a Pell Grant, a federal need-based aid grant, while in college.

SAVE re-imagined the Department of Education’s income-based repayment plans. Under these plans, borrowers would see their monthly loan payment cut in half, from 10% to 5% of their discretionary income. The program also increased the threshold for income that is exempt from the calculation from 150% to 225% of the poverty line. In addition, borrowers could qualify for loan cancellation in as little as 10 years instead of 20 or more, depending on their loan amounts. The plan also waived accrued unpaid interest.

Under the new SAVE Plan, only 22% of undergraduate borrowers were expected to repay their loans, and it was estimated to cost American taxpayers $475 billion over 10 years.

What Exactly Got Struck Down by the Courts?

The Eastern District of Missouri judge’s order blocked the administration from handing out any additional debt cancellation under SAVE, which means that the administration will no longer be able to accelerate to 10 years its debt cancellation for borrowers with $12,000 or less in loans. Nor can Biden cancel the remaining balance of a borrower’s loan after 20 years of repayment under this reading of the authorizing statute. The debt remains collectible.

The District of Kansas judge’s order prevented the department from implementing another aspect of SAVE: reducing the monthly loan payment from 10% to 5% of a borrower’s discretionary income, which was scheduled to take effect on July 1. The judge’s order also blocked a provision that would have prevented the department from automatically designating borrowers as in default.

Both federal judges found that the department lacked the authority to make significant changes to the income-based repayment plan without explicit authorization from Congress. The Major Questions Doctrine, which helps judges see when an agency has gone far beyond its authority to make major rules without authorization from Congress, played a significant role in both decisions. This doctrine is also what helped stop Biden’s earlier plan at the Supreme Court.

What Remains?

Neither judge’s orders reversed the $5.5 billion already canceled under SAVE, which had been canceled due to the Biden administration implementing some of the SAVE provisions ahead of schedule.

The injunctions also did not affect other provisions of SAVE, such as increasing the income exemption threshold from 150% to 225% of the federal poverty line, excluding spousal income for married borrowers who file taxes separately, or limiting interest accrual. As a result, more than 4 million borrowers will still pay $0 under the SAVE plan while legal action is ongoing.

What Happens Next?

The Biden administration will likely appeal the injunctions, since debt cancellation has been a campaign promise. The future of the SAVE Plan will likely be determined in further court battles and could end up in the Supreme Court. In the meantime, the department is barred from canceling the balances for any additional borrowers under SAVE, a result that should be broadly welcomed by American taxpayers.

Biden should remember that none of his efforts at debt cancellation have offered a systemic answer for the rising cost of college. Instead, subsidizing loans and tuition only encourages more debt and higher tuition.

Moreover, shifting the debt burden from those who willingly took out loans to attend college onto 100 million taxpayers—including the two-thirds of Americans who have not chosen to pursue higher education—is bad policy and bad economics.

Madison Marino is a senior research associate in the Center for Education Policy at The Heritage Foundation.

Reprinted with Permission from The Daily Signal – By Madison Marino

The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.

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Kim
Kim
23 days ago

So…how much of our money has already gone out to college loan borrowers despite court rulings that say biden can’t do that? I’ve heard that none has been spent like this and other sources saying hundreds of billions already have been spent.

As a hard-working taxpayer, I vehemently object to my tax dollars–any of them–being given away like candy on Halloween. “Trick-or-treat democrats” seems so appropriate for this administration; taxpayers get tricked and the takers are treated to a cheaper college education. Not fair. No one (other than my parents and I) paid my way through school. “Back then”, we had the moral imperative called individual responsibility.

MAGA 2024

PaulE
PaulE
23 days ago

Since when has a court ruling that finds a Biden administration act illegal and unconstitutional ever stopped Old Joe and his handlers from ignoring the courts and going full speed ahead? Sorry, but if rulings from the Supreme Court on finding the President lacks the power to unilaterally cancel student loans didn’t stop Old Joe, what makes the author or AMAC think two lowly federal judges essentially deciding the exact same thing will make a difference now? Courts only matter to Democrats when the rulings rubber stamp whatever it is they want to do.

WJS
WJS
23 days ago

Whatever happened to “Your Responsibility”.

Robert Zuccaro
Robert Zuccaro
23 days ago

Trumps plan is for everyone to keep more of their money while Bidens plan is to take more of everyone’s money and give it to ppl who vote for him.

James DeBona
James DeBona
23 days ago

Loans are NEVER, EVER forgiven or dismissed! They are only transferred to others! Usually, and especially in this case, taxpayers!

cathy
cathy
23 days ago

I sent a bill to the education department asking for my daughter’s money back on the loan she paid off.

Theresa Coughlin
Theresa Coughlin
23 days ago

you omitted the word AGAIN from your headline.

Orion Bennett
Orion Bennett
23 days ago

The mere concept of paying the college debt, gets / got my craw. I avoided college, because my parents couldn’t afford to send me, and I was an average student in high school, unable to get scholarships, or work my way through. (I could do one or the other, work or study … not both.). I did later while married take courses at a junior college, and after laid off from a job I worked 19 years, go into debt for an education in graphic design … but paid that off, in full, within three years. (a diploma, not a degree). So the concept of paying off student loans with my tax dollars is just WRONG … and I am totally AGAINST doing it.

Ol'man
Ol'man
23 days ago

What is so hard to understand about this? You take the loan out, you use it for your school, you pay the loan back. It’s not the taxpayers’ fault that you made a bad investment in yourself. You’re a big boy now, buck up and grind out them payments. I did it, my kids did it, so you can too! Just because you got that liberal arts, “Do you want fries with that burger degree” doesn’t make you special.

FedUp
FedUp
23 days ago

I fail to see why tax payers will end up “eating” the money that Joe has already illegally cancelled. He cancelled those loans illegally after SCOTUS told him he had no authority to do it. And he bragged during speeches about ignoring the ruling.
Now, since he did this with no presidential authority, it sounds like this was done on his own, outside the scope of his presidential duties. Based on the new SCOTUS ruling, it seems like he’s open to federal prosecution for those loan cancellations.

Carolyn
Carolyn
22 days ago

What has riled me up from the beginning is that my family made tremendous sacrifices to pay for my daughter’s education, but no one is offering to reimburse us, are they? It seems to be a common theme of this dismal administration to reward the irresponsible and punish the responsible. Not OK!!

James DeBona
James DeBona
23 days ago

Two federal court judges have to issue injunctions to keep our president from doing something illegal!???
Wow, so that’s where we’re at now huh?

jerry
jerry
23 days ago

This was one of the most unfair things Joe Biten has passed. It is very unfair for taxpayers who could not afford to go to college ( I was one ).We are paying for potential milli onaires on our hourly wage through taxes. Joe needs to find some other way to buy votes .Kick his dumba$$ out.

Pat R
Pat R
23 days ago

Well reckon Joe/Obama won’t be buying votes after all. Finally reining in the administrative branch; it’s about time.

Jeri
Jeri
23 days ago

Thank you courts. Did you watch the debate last week and get the message this guy is a walking disaster?

Joel
Joel
23 days ago

Just shifting the loan to the taxpayer. He is not teaching students any responsibility. I paid my loan off years ago by working hard and paying it off.

Nancy
Nancy
23 days ago

so Biden does not need cash to forgive loans – just file the paper work – wow.

ROBIN
ROBIN
23 days ago

Joe Biden himself took it on to cancel those student loans, so He himself should be responsible for paying them….out of HIS own pocket, after all, he can afford it !!

granky
granky
23 days ago

More good news.

Dean DuPlacey
Dean DuPlacey
18 days ago

I agree loans should not be forgiven at taxpayers expense, but why aren’t we talking about ending this failed loan program? Lending $150,000 to an 18 year old with little or no debt experience and often no collateral is a bit crazy in my view. No bank would make a loan like that.

Word of Truth
Word of Truth
18 days ago

Criminal Biden has no problem ignoring laws he doesn’t like and making up laws that he wants. To him (and his handlers) Supreme Court decisions are merely speed bumps to get around.

KT Lu
KT Lu
18 days ago

I worked full time and went to college ‘full time’ on the minimum 12 hours credit. Then I went to summer school to make up the credits I needed. I graduated in 4 years without a single penny of debt. If I can do it, others can too.
I think the government needs to get out of the college loan business and send it back to the colleges with their massive endowments. Force the Colleges to make the loans to the students they want to admit. Maybe then they’ll stop teaching worthless classes and handing out worthless ‘degrees’ to students who just want to party for 4 years. If the college then wants to ‘forgive’ the students debt, that is on them and their endowments, not the taxpayers back.

ButchDG
ButchDG
19 days ago

Didn’t this Crook N Chief, Buy-den, try and lose this before? It’s amazing, that during the so called debates, this idiot accused Trump of taking tax money to pay for something but yet this moron steals taxpayers money, thru executive order, to pay for elite student loan debts. Oh the irony.

At a place where truth rules
At a place where truth rules
22 days ago

Accepting they would take the money, sayd, you are selfish, ignorant dweebs. We worked while going to school, took years to pay off and glad to do so, and now, no, no, no!

Fed Up
Fed Up
23 days ago

Well, well…score one for the Constitution and one for constitutional law that divides government into branches with separate powers and responsibilities to prevent any one branch from becoming too powerful. Take that Biden and your pro-communist traitors.

anna hubert
anna hubert
23 days ago

Sucker punch the taxpayer and all is well That should get him a few votes if they are not too stoned

free thinker
free thinker
18 days ago

I think a portion of college loans should be forgiven, BUT NOT PAID BY TAXPAYERS. The colleges who overcharged ( that is most of them) should be required to forgive that portion. I paid by ck mine.

kdesq
kdesq
19 days ago

Demoncrats are surely demons from the abyss. If their lips are moving they are lying, period. They are power hungry greedy slime who want to be rich on our backs, not from something they created on their own.

Smike
Smike
20 days ago

So AMAC why did you sit back and allow the Social Security Act of 2024 to take away a benefit that had existed for decades that I had planned on to help my wife get by after I pass away. Before you let the Social Security Act of 2024 the surviving spouse could take the higher of the two social security benefits. That’s gone – Thanks AMAC
Is this the first chip from Social Security with more to follow that you’re just going to watch and do nothing about?

SCbubba
SCbubba
22 days ago

Absolutely AGAINST student loan forgiveness. I don’t care about the circumstances. Our son and his wife diligently worked and sacrificed for 9 years to payoff his $150K in Pharmacy School loans, finally becoming debt-free in 2021. It can be done!

Catharine Noel-Repetski
Catharine Noel-Repetski
18 days ago

Please find a way to get ALL of our taxes back from Biden and SAVE.

Rich
Rich
18 days ago

Wow, this almost restores some of my respect for the judicial system. Almost.

Cathy
Cathy
7 days ago

I worked my way through college so as to not incur any debt and I went to a local college that I could afford. Why should I as a taxpayer pay for those who incurred debt?

Ol1
Ol1
14 days ago

Go real jurists!

Lisa Skinner
Lisa Skinner
15 days ago

We need to be “unburdened by what has been” done to the American people by this
lawless administration.
FJB

Lisa
Lisa
15 days ago

If people sign off on a loan for anything, that person is responsible to pay it off. Otherwise, they should not qualify for loans.Colleges and Universities have money stashed…they should take the locks off the box and offer a few more scholarships each term. They are sitting on billions!!GREEDY THEY ARE

Shelia
Shelia
15 days ago

It isn’t fair to those who couldn’t afford to go to college with or without a loan. Biden is just trying to buy votes that he doesn’t deserve in the first place at the expense of the hardworking citizens of America.

BEA
BEA
16 days ago

OMG. Something or someone had the power to STOP Crazy Joe Biden from doing whatever he wants to do. How about the border next?

Smike
Smike
18 days ago

In the meantime the Social Security Act of 2024 chipped away at Social Security benefits without a fight from AMAC, AARP or any of the other organizations that defend Social Security benefits important to Senior citizens. For those of us who planned our retirement this act was a major blow that came out of nowhere to reduce benefits that had been to help the surviving widow after the death of their spouse for decades. Since this was allowed to occur without any resistance what’s next? Why did those dedicated to protecting us do nothing to stop this from happening?

Wayner
Wayner
18 days ago

Democraps like Bribem Biden disregard laws all the time. Buying votes by this method disenfranchises 2/3 of our population. Hopefully we can get rid of these criminals once the November elections are over.

Mike
Mike
21 days ago

we should cut Medicare next.

Donald Trump
President Joe Biden departs after speaking at the NAACP Convention, Tuesday, July 16, 2024, in Las Vegas, Nevada.
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