A U.S. Appeals Court has blocked former president Joe Biden's student debt relief plan.
The 8th U.S. Circuit Court of Appeals blocked Biden's Saving on a Valuable Education (SAVE) plan on Tuesday. This means “hundreds of millions of dollars of loans” for students earning a post-secondary degree will remain suspended.
Seven states argued that SAVE was essentially trying to find a roundabout way to forgive student debt even after the Supreme Court blocked Biden's debt cancellation plan in June 2023. The plaintiffs are the states of Arkansas, Florida, Georgia, Missouri, North Dakota, Ohio, and Oklahoma, who filed the action against the then president and the Department of Education in April 2024. The seven Republican-led states also argued that Biden had no “authority to establish” the SAVE plan.
Bankrate Consumer Lending Analyst Denny Ceizyk said Biden was only able to forgive about $175 billion of student loan debt for nearly 5 million borrowers.
"There was a lot of opposition to it from the outset," Ceizyk said. "It was designed to reduce the debt burden for students who have already incurred large amounts of debt."
So what's next?
Ceizyk says forgiveness is in the rearview mirror. Now, borrowers need to look towards how to repay their loans.
"Anyone who has any student loan debt needs to find out what repayment options they have and enroll on any income-based repayment possibilities sooner rather than later," said Ceizyk.
Students pursuing a four-year degree are taking on more costs and in the end more debt. According to Ceizyk, tuition has jumped about 36% over the last 15 years.
"Borrowers are trying to balance that into their budget going forward knowing that repayment is likely to be required," he said.