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 Biden’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 court’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 states—Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma—challenging the legality of the Biden administration’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.
“The statute’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,” 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 Education’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 court’s injunction, blocking the entire SAVE Rule. The judges determined that the rule’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 Plan—such as new payment thresholds and interest accrual policies—are also now blocked.
By Chase Smith
