US Supreme Court's Refusal to Lift Injunction on SAVE Plan Could Worsen Student Debt Crisis: Who can still benefit?

The United States Supreme Court’s decision, earlier in August 2024, to uphold an injunction against President Biden’s student loan forgiveness plan, known as the Saving on a Valuable Education (SAVE) plan, has left millions of borrowers in uncertainty.

The US Supreme Court ruling blocks a central avenue for federal student loan debt relief that many had been relying on, exacerbating an already severe student debt crisis in the country. While President Biden has cancelled significant amounts of debt since taking office, the Supreme Court's decision threatens to undo the progress made in reducing borrowers' financial burdens.

Understanding 'SAVE' plan
The Saving on a Valuable Education (SAVE) plan was one of President Biden's key initiatives aimed at providing targeted student debt relief. Launched as part of broader efforts to address the student loan crisis, SAVE offered borrowers a more manageable way to repay their loans based on their income and family size. Under the SAVE plan , borrowers' monthly payments were capped at a percentage of their discretionary income, and after making consistent payments for a set period—typically 20 or 25 years—the remaining balance could be forgiven.

The plan was particularly beneficial to borrowers with lower incomes, as many saw their monthly payments drop significantly, with some eligible for complete forgiveness of their remaining debt. Over the 10 months that the plan was available, more than 8 million borrowers enrolled, with approximately 400,000 individuals receiving some form of debt cancellation.

However, the SAVE plan's success was cut short when a federal appellate court issued an injunction in July 2023, temporarily halting the program. Republican-led states challenged the legality of the plan, arguing that the executive branch did not have the authority to implement such sweeping debt forgiveness without congressional approval. The Supreme Court’s refusal to lift this injunction now places the future of the plan in jeopardy, leaving millions of borrowers in limbo.

Who can still benefit from debt relief?
While the SAVE plan remains blocked, there are still other avenues available for certain borrowers to obtain student debt relief. Here are the main groups that may still qualify:

Borrowers defrauded by schools
Borrowers who attended schools that misled them or engaged in predatory practices may still be eligible for debt forgiveness. Known as borrower defense claims, these provide relief to individuals who can demonstrate that their schools made false promises or engaged in fraudulent activities. Many borrowers have already seen their loans discharged through this program, and it remains an active avenue for relief despite the injunction on SAVE.

Public Service Loan Forgiveness (PSLF) Program
Borrowers working in public service fields such as education, healthcare, firefighting, and the military may qualify for debt forgiveness under the Public Service Loan Forgiveness (PSLF) program. Established in 2007, this program allows borrowers to have their remaining loans forgiven after making 120 qualifying payments (roughly 10 years) while employed in the public sector.

Although the program was initially marred by bureaucratic hurdles and mismanagement, the Biden administration has made significant reforms. These changes have resulted in debt forgiveness for nearly 1 million public service workers. The PSLF remains in place, providing a valuable lifeline for those who continue to serve in critical roles across the country.

Borrowers with disabilities
Another group that can still benefit from loan forgiveness includes individuals with total and permanent disabilities (TPD). The Biden administration has approved $14.1 billion in forgiveness for around 548,000 borrowers who are unable to work due to their disabilities, including many military veterans. This program remains operational and offers significant relief to those unable to manage loan repayments due to their medical conditions.

Temporary relief for borrowers during legal challenges
While the SAVE plan is on hold, one crucial element remains in place: interest on federal loans will not accrue while the legal challenges are pending. This pause offers temporary relief to borrowers who might otherwise face skyrocketing debt balances due to compounding interest. The Education Department has assured borrowers that updates will be provided regularly as the case proceeds through the courts.
The broader implications of the Supreme Court's decision to maintain the injunction

The Supreme Court’s refusal to lift the injunction against the SAVE plan is a significant blow to millions of Americans hoping for financial relief. If the legal challenges succeed and the plan is permanently blocked, many borrowers will be forced to revert to traditional repayment plans, which often come with significantly higher monthly payments. This development could worsen the student debt crisis, pushing more borrowers into financial hardship and making it harder for them to afford basic needs such as housing and healthcare.

As the legal battle unfolds, the Biden administration continues to advocate for other forms of relief, including efforts to streamline existing programs and reduce administrative barriers that have historically limited access to loan forgiveness. For example, the PSLF program has been significantly reformed, and the Department of Education is working to improve outreach to borrowers eligible for forgiveness due to disability or borrower defense claims.

However, the blocked SAVE plan and the Supreme Court’s broader rejection of President Biden’s original $400 billion debt forgiveness proposal signal a challenging road ahead for widespread student debt cancellation. Despite broad public support for some form of debt relief, critics—primarily from conservative groups and Republican-led states—argue that such forgiveness unfairly shifts the financial burden to taxpayers.