JEFFERSON CITY — The U.S. Eighth Circuit Court of Appeals has upheld a court order secured by Missouri Attorney General Andrew Bailey, which blocks the Biden Administration's "SAVE" Plan for student loan forgiveness.
The legal challenge argued that the plan, which would cost around half a trillion dollars, was enacted without Congressional approval, thus violating constitutional requirements.
Bailey criticized the Biden-Harris Administration for attempting to bypass the Constitution in forgiving student loans, suggesting it was politically motivated during an election year.
The Eighth Circuit's decision builds upon a previous preliminary injunction from the Eastern District of Missouri.
The ruling prohibits the federal government from further forgiving student loan principal or interest, ceasing to charge accrued interest, or implementing the "SAVE" Plan’s payment-threshold provisions.
The injunction will remain in place until further rulings by this court or the United States Supreme Court.
"The Eighth Circuit rightfully recognized that Joe Biden and Kamala Harris will do anything they can to evade the Constitution when it comes to ‘forgiving’ student loans in an election year," Bailey said in a provided statement. "This court order is a stark reminder to the Biden-Harris Administration that Congress did not grant them the authority to saddle working Americans with $500 billion in someone else’s Ivy League debt. This is a huge win for every American who still believes in paying their own way."
Judges Raymond Gruender, Ralph Erickson and Steven Grasz issued the order on Aug. 9.
"The Government is, for any borrower whose loans are governed in whole or in part by the terms of the Improving Income Driven Repayment for the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program, 88 Fed. Reg. 43820, enjoined from any further forgiveness of principal or interest, from not charging borrowers accrued interest, and from further implementing SAVE’s payment-threshold provisions," the judges wrote in the ruling. "This injunction will remain in effect until further order of this court or the Supreme Court of the United States. The administrative stay is hereby superseded."
Previously, the Supreme Court ruled in favor of Bailey's challenge against a similar student loan forgiveness plan, striking it down as unconstitutional with a 6-3 decision.
The court highlighted that the plan had a significant financial impact on the federal budget without Congressional authorization.
It recognized Missouri's student loan servicing agency, MOHELA, as part of the state government, granting Missouri the standing to challenge the plan.
The lawsuit against the "SAVE" Plan was supported by attorneys general from Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma.
The states argued that the president's new plan, like the previous one, imposed a costly policy unilaterally, which he could not pass through Congress.
"Yet again, the President is unilaterally trying to impose an extraordinarily expensive and controversial policy that he could not get through Congress," the states argued. "This latest attempt to sidestep the Constitution is only the most recent instance in a long but troubling pattern of the President relying on innocuous language from decades-old statutes to impose drastic, costly policy changes on the American people without their consent."
The states noted that the president attempted to use old statutes to justify significant and controversial policy changes without public consent, continuing a pattern of sidestepping constitutional processes.
U.S. Court of Appeals for the Eighth Circuit case number: 24-2332