Federal Appeals Court Blocks Biden’s $475B Student Loan Bailout
Federal Appeals Court Blocks Biden’s $475B Student Loan Bailout
THE NEWS
A federal appeals court has fully blocked the Saving on a Valuable Education (SAVE) plan, a student debt relief initiative that former President Joe Biden authorized.
The Eighth US Circuit Court of Appeals found that Biden’s Education Department had exceeded its constitutional authority in creating the program, which critics argue amounted to a costly debt cancellation effort.
The Biden administration had canceled around $183.6 billion before the plan was halted, and it remains unclear whether the new Trump-led Education Department will officially withdraw the measure.
TIMELINE
- 2003: Congress passes a law to aid war veterans, later cited by the Biden administration as justification for pandemic-related loan forgiveness.
- June 2023: The Supreme Court strikes down a separate $430 billion student debt plan as unconstitutional, setting the stage for further legal battles.
- February 2024: The SAVE plan begins, distributing $1.2 billion in debt relief to borrowers; roughly 7.5 million Americans sign up for forgiveness under its provisions.
- Mid-2024 to 2025: Republican state AGs file suit, obtaining a preliminary injunction at the district level. The Eighth Circuit partially blocks the program, then issues a final judgment invalidating it completely.
- Recent Ruling (February 2025): Judge L. Steven Grasz’s opinion states that the Education Secretary lacks explicit congressional authorization to forgive broad swaths of debt.
REACTIONS
Judge L. Steven Grasz (Eighth Circuit Court): Held that Congress never granted explicit authority to create such an extensive loan forgiveness program and cited the “major questions doctrine” in ruling against the Education Department.
Missouri AG Andrew Bailey: Hailed the ruling as a victory preventing working Americans from “footing the bill for someone else’s Ivy League debt.”
Sen. Bill Cassidy (R-La.): Criticized the effort as a scheme to transfer private debt onto the public, describing it as “an abuse of power” by the prior administration.
Supreme Court Precedent: Chief Justice John Roberts previously argued against broad student debt relief, citing the massive financial scope.
Biden Administration (Prior): Claimed emergency powers stemming from the COVID-19 pandemic gave the Education Secretary authority to wipe out billions in debt.
WHAT’S NEXT
The plan’s future remains uncertain under the Trump administration, which has already listed President Trump and acting secretary Denise Carter in place of Biden and former Secretary Miguel Cardona as defendants in the lawsuit.
Trump has repeatedly expressed his desire to abolish the Education Department altogether, hinting that he may rely on Secretary-designate Linda McMahon to shift its functions back to the states.
Borrowers who received partial forgiveness or anticipated additional relief face renewed uncertainty about repayment obligations.
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