When the 8th U.S. Circuit Court of Appeals blocked the Biden-Harris administration’s latest student loan bailout scheme, it potentially saved American taxpayers nearly half a trillion dollars.
Now, the Supreme Court has spoken. By unanimously rejecting the administration’s request to lift the lower court’s injunction, it effectively blocked this loan-cancellation gambit while underlying litigation proceeds—and prevented Americans from footing the bill for an Ivy League bailout.
The seven-state lawsuit challenged the Saving on a Valuable Education (SAVE) plan, which the states argued was just another version of the bailout scheme that the Supreme Court struck down last summer. The 8th Circuit apparently agreed, even scolding the administration for flouting previous rulings and directing it to put further attempts at “forgiveness” on ice.
To be clear, so-called forgiveness is just a euphemism for foisting these student loans onto the backs of taxpayers. The administration’s SAVE plan aimed to do just that for millions of borrowers, who would have their loans “forgiven” after 10 years, without paying a single dime toward either principal or interest. In many cases, interest wouldn’t even accrue.
But by the time this latest injunction was handed down, the Biden-Harris administration had already used the SAVE plan to conduct $5.5 billion in student loan bailouts. That price tag almost makes the administration’s previous plan—which could’ve cost more than $1 trillion, but was struck down by the Supreme Court—look like a bargain.
Young adults, including college graduates, have soured on the economic policies of this administration. Runaway government spending has created a veritable cost-of-living crisis with 40-year-high inflation, record low levels of homeownership affordability, and the highest grocery prices in history. A quarter of renters skipped meals in the past year to pay their rent on time.
The financial situation for young Americans is so untenable that they are moving back in with family members at the fastest rate since the 1940s. That kind of retrogression is why—for the first time since the Great Depression—a generation of Americans believes it will have a lower standard of living than their parents enjoyed.
The Biden-Harris administration should be performing a mea culpa, acknowledging how its disastrous overspending worsened the burden on young borrowers. Instead, it’s trying to paper over the problem with even more government spending and borrowing.
The SAVE plan was allegedly based on the 1992 amendments to the Higher Education Act, which provided congressional authorization for income-driven repayment plans. But as the 8th Circuit pointed out, the administration’s newest scheme was of “an order of magnitude broader than anything that has come before” and unsupported by the original statute.
The education secretary was never given the authority to construct new repayment plans in such a way that borrowers could make no payments and then see their debt canceled. The judges rightly noted in their opinion that such a drastic change would require authorization by Congress.
Unfortunately, the administration still intends to flout statutory law and remains committed to forcing millions of Americans who never went to college—or those who paid their college loans in full—into paying off the debts of more recent college grads.
Instead of putting borrowers back onto normal repayment plans, the Biden-Harris administration has effectively frozen more than 8 million accounts. They are now in interest-free forbearance, which is to say that taxpayers are once again paying the price as those borrowers need make no payments or worry about interest accruing on their outstanding balances.
Foregone student loan revenue has already cost taxpayers over $400 billion. Now, those losses will continue.
Such forbearance is also unnecessary since borrowers still have access to income-driven repayment plans, even after this latest court injunction. Payments under such schedules are capped at 20% of discretionary income.
While the courts have delivered a win for taxpayers, the war over student loan bailouts isn’t over. The Biden-Harris administration is still hellbent on sticking you with the bill for other people’s student loans and has indicated that it intends to fight the ruling. If so, the Supreme Court is its only available option for redress.
Mercifully, since that court has already struck down one of the administration’s cockamamie bailout schemes, American taxpayers may soon be breathing a sigh of (permanent) relief.
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