Appeals Court Blocks Biden-Era Student Loan Forgiveness Plan

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The Eighth Circuit says the Biden administration went beyond the law by canceling loans rather than ensuring repayment.

A federal appellate court has blocked key provisions of former President Joe Bidenโ€™s student debt relief initiative, ruling that the Department of Education overstepped its legal authority in implementing broad loan forgiveness through its income-contingent repayment (ICR) plan.

The U.S. Court of Appeals for the Eighth Circuit issued the decision on Feb. 18, affirming a lower courtโ€™s preliminary injunction against the Saving on a Valuable Education (SAVE) Plan. The program is designed to lower monthly payments and accelerate forgiveness for some borrowers.

The ruling is in response to a lawsuit filed by seven statesโ€”Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahomaโ€”challenging the legality of the Biden administrationโ€™s student loan forgiveness program.

The court found that the secretary of education lacked the statutory authority to implement loan forgiveness under an ICR plan.

โ€œThe statuteโ€™s text and structure require ICR plans to be designed for a borrower to pay his or her loan balance in full through payments that can fluctuate based on income during the payment term,โ€ the ruling states.

The judges determined that the SAVE Plan went beyond this framework by forgiving loans rather than ensuring repayment, making the policy inconsistent with congressional intent.

The lawsuit argues that altering payment thresholds, stopping interest accrual, and providing early loan forgiveness exceeded the Department of Educationโ€™s authority.

The appellate panel agreed, ruling that while the department has the power to create repayment plans, it must do so within existing law.

The decision also expanded the district courtโ€™s injunction, blocking the entire SAVE Rule. The judges determined that the ruleโ€™s loan forgiveness provisions were central to its structure and could not be separated from the rest of the plan.

Because the forgiveness provisions were deemed unlawful and inseparable from the rule, other aspects of the SAVE Planโ€”such as new payment thresholds and interest accrual policiesโ€”are also now blocked.

Byย Chase Smith

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