A federal appeals court delivered a crushing blow Tuesday to a more than $475 billion student debt cancellation program begun by former President Joe Biden, ordering the underlying regulation be blocked in its entirety.
The Eighth US Circuit Court of Appeals had partially blocked the loan forgiveness effort last year — but a three-judge panel at the St. Louis-based court issued a final judgment to a lower court prohibiting any part of the initiative from taking effect.
Judge L. Steven Grasz in a 25-page opinion ruled that Biden’s Education Secretary, Miguel Cardona, had “gone well beyond” his constitutional authority in creating the Saving on a Valuable Education (SAVE) plan.
“Rather than implying by omission or other ambiguities, Congress has spoken clearly when creating a repayment plan with loan forgiveness or otherwise authorizing it — explicitly stating the Secretary should cancel, discharge, repay, or assume the remaining unpaid balance,” Grasz wrote, finding “no comparable language” in the SAVE Plan.
In 2023, the Penn Wharton Budget Model estimated the so-called “repayment plan,” which Grasz said allowed for student debt to be “largely forgiven rather than repaid, would cost taxpayers $475 billion over the next decade.
Republican state attorneys general from Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma brought the suit last year against Biden and Cardona — and appealed after winning a partial preliminary injunction at the district level.
That was after $1.2 billion already went out the door to student borrowers under the program, which started in February 2024. Around 7.5 million Americans signed up for debt cancellation in all.
“We obtained another court order BLOCKING an illegal Biden-era student loan scheme,” Missouri AG Andrew Bailey crowed on X. “Though @JoeBiden is out of office, this precedent is imperative to ensuring a President cannot force working Americans to foot the bill for someone else’s Ivy League debt.”
In total, the Biden administration cancelled around $183.6 billion in student debt.
Congressional Republicans accused Biden of attempting to “buy votes” before the 2024 election with his debt forgiveness programs — one of which, costing $430 billion, was struck down as unconstitutional by the Supreme Court in June 2023.
“He isn’t ‘forgiving’ debt. He is taking the debt from those who willingly took it out to go to college and transferring it onto taxpayers who decided not to go to college or already paid off their loans,” Sen. Bill Cassidy (R-La.) charged in a statement last year.
“This is an abuse of power before an election in an attempt to buy votes at the expense of American taxpayers,” added Cassidy, who now chairs the Senate Health, Education, Labor and Pensions (HELP) Committee.
The SAVE plan was income-based and moved to cut monthly student loan payments in half and eliminate monthly payments for minimum-wage earners.
It also tried to forgive outstanding debt for student borrowers who owe $12,000 or fewer after making payments for 10 years.
Bailey and other state AGs had also successfully sued Biden’s Education Department just weeks before the election to halt another $147 billion in student loans being forgiven.
The Biden administration claimed to derive the authority to write off federally held loans from decades-old statutes — including a 2003 law designed to help veterans of the Iraq and Afghanistan wars that was interpreted liberally by the Biden administration to include those strapped financially during the national emergency of the COVID-19 pandemic.
Supreme Court Chief Justice John Roberts wrote in the majority opinion striking down the first $430 billion effort that an education secretary “has never previously claimed powers of this magnitude.”
Grasz offered a similar response to the $475 billion forgiveness push.
“As with the previous attempt at loan forgiveness, the major questions doctrine informs our analysis,” he wrote. “We assume Congress would have provided clear signs if it authorized such significant power to the Secretary. It did not.”
The SAVE case was heard by Grasz, an appointee of President Trump during his first term, Judge Ralph Erickson, another Trump appointee, and Judge Raymond Gruender, an appointee of former President George W. Bush.
It’s unclear whether the plan will be withdrawn by Trump’s Education Department, with the current president and acting secretary Denise Carter now listed as defendants instead of Biden and Cardona.
Trump, 78, has said he wants to shut the entire department down — and have Education Secretary-designate Linda McMahon oversee the return of its duties to US states.
The Post reached out to the Education Department for comment.
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