In early spring, Georgia Attorney General Chris Carr spearheaded a coalition of seven states to challenge the Biden Administration’s latest effort to provide debt relief to student borrowers. Carr argued that the initiative “brazenly violates the law,” labeling it an “egregious example of federal overreach.”
The Department of Education reports that today’s bachelor’s degree holders carry an average student loan debt of nearly $25,000. Additionally, about one-third of student loan borrowers do not complete their degrees, often forced to leave programs due to the high costs of attendance. At Georgia State University, the median federal loan debt for graduates is $20,903, translating to an average repayment of $222 per month.
The proposed Saving on a Valuable Education (SAVE) plan aims to reduce student loan debt burdens through a generous income-driven repayment plan, reducing barriers to postsecondary degree seekers from low and middle-income backgrounds. Boasting lower monthly payment rates (including zero-dollar payments), income calculations based solely on discretionary income, faster forgiveness pathways, elimination of monthly interest and many other features, the plan would save borrowers who opt-in to the program thousands throughout their loans’ lifetime.
SAVE comes in the wake of the Supreme Court’s ruling on Biden’s previous 2022 debt plan, which would have directly canceled $10,000 of debt per holder, amounting to nearly $430 billion in relief nationally. After initially being blocked by state action, the Supreme Court held that the HEROES Act of 2003 — which grants the Secretary of Education the legal authority to “waive or modify” student debt obligations for borrowers affected by a national emergency — does not in fact give the Secretary the power to waive student debt obligation.
Legal experts and educational advocates have criticized the Court’s decision to strike down the student debt cancellation plan. In dissent, Justice Elena Kagan said on the decision “In every respect, the Court today exceeds its proper, limited role in our Nation’s governance.”
Like with the previous debt plan, the SAVE program has encountered several state-led legal challenges from Republican officials looking to invalidate all student loan forgiveness attempts. The first of these injunctions was granted in late June, partially blocking the plan. In July, judges from the 8th Circuit Court of Appeals issued an administrative stay that further blocked the plan, effectively pausing additional components of SAVE until the cases are fully litigated.
Most recently, on September 5th, Judge J. Randal Hall of the Southern District of Georgia issued a temporary injunction after Republican lawmakers alleged that the Department of Education intended to initiate debt forgiveness ahead of the set fall timeline. Hearings on the dispute were scheduled to be held on September 18th, where it seems unlikely conservative judges in the Southern District will support the Biden Administration’s plan.
“These rulings will most certainly exacerbate financial disparities and hinder stability for those struggling to meet basic needs,” stated Staci Fox, President and CEO of the Georgia Budget and Policy Institute in a statement a few months ago on the continued injunctions against student debt relief. Last year, a report from the Student Debt Crisis Center revealed that student loan borrowers struggle to afford food, shelter and healthcare at rates significantly higher than the national average.
The ever-changing landscape has left many borrowers in limbo as the courts prepare to hear arguments. Since the initial student loan moratoriums in the wake of COVID lockdowns, the future of borrowers’ student loan debt has remained in constant flux, leaving many unable to financially plan for the future. As legal battles intensify, it seems entirely possible that the issue may return to the Supreme Court. Until then, the Department of Education has promised to keep the 8 million Americans currently enrolled in the SAVE plan updated on the status of their loans through the Department’s website.
