Supreme Court Chaos: Impact on Student Loans and Biden’s SAVE Plan

The Supreme Court has rocked the world of student loan borrowers once again. In a surprising decision, the court disregarded nearly forty years of precedent concerning federal regulatory agencies like the Department of Education. This blog post will discuss the court’s decision, the Biden administration reaction, and its impact on borrowers with the SAVE Plan.

Key Points:

• The Supreme Court continues to ignore precedent.
• The U.S. Supreme Court’s latest decision ignores forty years of precedent related to federal regulatory agencies like the U.S. Department of Education.
• The Biden administration suspended student loan payments for three million borrowers.

The Supreme Court justices are at it again. Precedent is so overrated says only the Supreme Court.  Just imagine the judicial chaos if other courts decide to start ignoring precedent. You don’t have to go to law school to know that courts, including the U.S. Supreme Court, have always respected precedent until now.

Hell, the high court members such as Justice John Roberts, Justice Samuel Alito, Justice Clarence Thomas, Justice Neil Gorsuch, Justice Brett Kavanaugh, and Justice Amy Coney Barrett even said they respected precedent at their confirmation hearings. Oh wait, they lied to us. All of us.

They all said over and over again that Roe v. Wade was established precedent multiple times over, and yet, when they had their chance, Roe v. Wade was overturned after more than fifty years.

It’s now 2024; to put it simply, a woman today has fewer rights than her mother. I could go on forever on the subject of judicial shame and hypocrisy the highest court in the land has displayed. Acts, whether on or off the bench, that would result in other judges being removed or impeached.

But now, throwing caution to the wind just one more time, the U.S. Supreme Court does it again. I’ve always wondered how difficult it must be to outdo yourself, but the Supreme Court does it with ease.

Who Cares About Case Precedent? Let the Chaos Begin!

The U.S. Supreme Court, wait for it, has ignored precedent yet again. This time, ignoring forty years of precedent regarding federal regulatory agencies and handling ambiguities, which are typically delegated to the rulemaking authority. In this case, the U.S. Department of Education.

In response to this unnecessary chaos, the Biden administration suspended student loan payments for three million borrowers starting this week.

The Republican Led States Lawsuit That Affect Student Loan Borrowers

I’ve blogged about this case before. The states opposing student loan forgiveness are Alabama, Alaska, Arkansas, Florida (I pronounce it Flori-duh), Georgia, Idaho, Iowa, Louisiana, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, Texas, and Utah. You can see the accompanying YouTube video as well by clicking this link.

Attorney General Kris Kobach of Kansas initially filed the lawsuit because he, like the other states, could care less if their residents benefit from saving money that would only increase tax revenue in their states.

President Joe Biden’s SAVE Plan

In my blog post, I argued that these states don’t have “standing” to argue how the federal government spends its money. Standing is the legal way of saying they have no legal right to be involved in the lawsuit as it doesn’t affect them.

However, I agree, and the court confirmed that Missouri would have standing as they stand to lose revenue from Biden’s SAVE plan. That’s because student loan servicer MOHELA is located in Missouri.

I’m sure MOHELA didn’t pressure Missouri Republican officials to join the lawsuit and argue against the SAVE Plan (I’m being sarcastic for the record).

$5 Billion More in Student Loan Debt Relief for 74,000 Borrowers

As a result of these nonsensical lawsuits where states are telling the federal government how to spend their money, one court granted an injunction blocking parts of the SAVE plan.

Here’s where we learn about the law of unintended consequences, coincidently, my favorite law.

The Biden Administration Stops Student Loan Payments

More than three million borrowers are enrolled in the SAVE plan. So, besides not having to make payments, the pause also freezes interest. So, loan balances will remain the same.

Now, the issue is for how long will student loan payments be paused? The answer is unknown, but a good guess is that until fall, student loan servicers will figure out the new payment plan as one of the rulings allowing for lower payments. With three million borrowers, it will take time to hash that out.

The good news for the Biden Administration is that lower payments are allowed with the SAVE plan, per the court rulings. This means that borrowers may pay just 5% of their discretionary income. For borrowers earning less than $32,800, the plan payments would be $0.

Please note the information on this site does not constitute legal advice and should be considered for informational purposes only.

The SAVE plan is the most affordable payment plan since other income-driven repayment plans (IDRs) require at least ten percent of discretionary income.

There will be additional court battles on this issue, and I’ll make sure to have follow-up posts.

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