In a recent development, the Supreme Court has rejected the Biden administration's plea to reinstate its latest plan to address the issue of federal student loan debt. The court's decision comes as a blow to the administration's efforts to tackle this pressing issue, with a nationwide injunction still in place.

The Education Department had finalized its Saving on a Valuable Education (SAVE) plan in July 2023, following the Supreme Court's ruling that the administration lacked the authority to implement President Joe Biden's previous loan forgiveness program. However, conservative-leaning states, predominantly led by Missouri, challenged the new plan, just as they did with the earlier proposal.

One of the key provisions of the new plan was to cap undergraduate loan repayments at 5% of borrowers' incomes, as opposed to the previous cap of 10%. Challengers argued that this would require an expenditure of up to $475 billion, which was not authorized by Congress. They contended that the plan, much like Biden's previous proposal, should be blocked due to the lack of express authorization from Congress for such significant economic policy changes.

The Supreme Court's conservative justices have adhered to the "major questions" doctrine, which asserts that federal agencies cannot introduce sweeping new policies with substantial economic effects without explicit approval from Congress. The states opposing the plan emphasized the Biden administration's assertion of "unfettered authority" to cancel every penny of every loan, describing it as staggering.

Apart from the repayment caps, the SAVE plan also aimed to limit accrued interest and shorten the payment period for certain small loans, enabling their eventual forgiveness. However, on April 9th, the states filed a lawsuit seeking to halt the plan's implementation, resulting in a federal judge in Missouri temporarily suspending only the shortened repayment proposal. Nevertheless, the 8th U.S. Circuit Court of Appeals in St. Louis issued a broader injunction on August 9th, putting other provisions of the plan on hold.

In response to the court's decision, Solicitor General Elizabeth Prelogar argued that the changes to repayment amounts aligned with a 1993 federal law, which grants the Education Department the authority to determine appropriate payment percentages based on income and repayment timelines. Prelogar also criticized the appeals court's injunction, stating that it not only targeted the new plan but also disrupted previously implemented changes dating back to 1994, potentially affecting borrowers who had made payments for years or even decades.

It's worth noting that approximately 8 million individuals are already enrolled in the SAVE plan, benefiting from previous provisions that have allowed for reduced repayment amounts. While the plan has faced challenges in other courts, the decision of the 8th Circuit Court of Appeals has rendered those cases less significant.

As a result, the Supreme Court dismissed a separate application brought by another group of states challenging the plan, acknowledging the diminishing relevance of these cases.

For now, the Biden administration's latest attempt to address federal student loan debt has been dealt a setback by the Supreme Court's denial of their emergency request. The fate of the SAVE plan and the looming question of how to alleviate the burden of student loan debt for millions of Americans remain uncertain, awaiting the decision of the appeals court currently handling the case.