Key Points
- The 8th Circuit Court of Appeals has blocked President Biden’s SAVE Plan through an emergency administrative stay.
- This decision is expected to force the Biden Administration to pause all student loan actions under the SAVE Plan, including extending the administrative forbearance.
- The court’s decision halts the implementation of the SAVE Plan until a ruling on the injunction pending appeal is made.
The 8th Circuit Court of Appeals has issued an emergency administrative stay, effectively blocking President Biden’s Saving On A Valuable Education (SAVE) Plan.
This decision, dated July 18, 2024, prohibits the administration from implementing or acting on the plan until a ruling is made on an injunction pending appeal.
The move is anticipated to force the Biden Administration to pause all student loan activities under the SAVE Plan, extending the current administrative forbearance while the issues surrounding the plan are sorted out.
Legal Implications And Impact
The emergency stay was granted in response to a motion filed by the State of Missouri and other states. The states argued that the SAVE Plan, a key initiative of the Biden Administration aimed at easing student loan burdens, is unconstitutional and required immediate judicial intervention to halt its progress.
The court’s order, unsigned, underscores the contentious nature of the plan and the legal battles it faces.
The immediate impact of the court’s decision is profound. The administrative stay halts the execution of the SAVE Plan, which was designed to provide significant relief to student loan borrowers. The SAVE plan's loan forgiveness initiative was halted by the 10th Circuit Court of Appeals, but until this order, the lower repayment plan was allowed to go into effect.
The Biden Administration must now pause all related activities, including lowering the repayment plan amounts, creating uncertainty for millions of borrowers who were counting on the plan’s benefits.
This pause will remain in effect until the 8th Circuit rules on the broader injunction pending appeal, a process that could take weeks or months.
The result is that the current administrative forbearance (which was in place for the month of July 2024) will likely be extended until these issues are resolved.
Final Thoughts
The blocking of the SAVE Plan by the 8th Circuit Court (along with the other stay in the 10th Circuit Court) highlights the challenging legal issues the Biden administration is facing by unilaterally offering loan forgiveness and modifying repayment plans.
While the SAVE plan may still prevail in court, the path forward will be challenging.
The emergency stay not only halts the plan’s implementation but also sets the stage for an extended legal battle that will end up at the Supreme Court. In the meantime, student loan borrowers will be stuck in limbo.
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Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared toward anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications, including the New York Times, Wall Street Journal, Washington Post, ABC, NBC, Today, and more. He is also a regular contributor to Forbes.
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