President Biden’s latest effort to wipe out student loan debt for millions of Americans is in jeopardy.
The Supreme Court on Wednesday refused to allow a key component of the policy, known as the SAVE plan, to move forward after an emergency application by the Biden administration.
Until Republican-led states sued to block the plan over the summer, SAVE had been the main way for borrowers to apply for loan forgiveness. The program allowed people to make payments based on income and family size; some borrowers ended up having their remaining debt canceled altogether.
Other elements of Mr. Biden’s loan forgiveness plan remain in effect for now. And over the course of Mr. Biden’s presidency, his administration has canceled about $167 billion in loans for 4.75 million people, or roughly one in 10 federal loan holders.
But Wednesday’s decision leaves millions of Americans in limbo.
Here is a look at what the ruling means for borrowers and what happens next:
Who was eligible for SAVE?
Most people with federal undergraduate or graduate loans could apply for forgiveness under SAVE, which stands for Saving on a Valuable Education.
But the amount of relief it provided varied depending on factors such as income and family size. More than eight million people enrolled in the program during the roughly 10 months that it was available, and about 400,000 of them got some amount of debt canceled.
The plan has been on hold since July, when a federal appellate court issued a ruling temporarily blocking the program. The Supreme Court on Wednesday denied a request by the Biden administration to lift that injunction.
What happens next?
SAVE is on hold and interest on loans will not accrue while lower courts consider the merits of the legal challenges.
If those challenges succeed, millions of students will most likely be forced to revert to other plans with significantly higher monthly payments.
The Supreme Court said it expected a lower court to move quickly on the case and “render its decision with appropriate dispatch.” The Education Department has said it will provide regular updates for borrowers on its website.
Who can still apply for debt relief?
There are still pathways for people who want to apply for debt relief, including those who borrowed money to attend schools that misled or took advantage of them financially.
Another program is aimed at people working in public service — including teachers, firefighters and members of the military — who had been paying down loans for at least 10 years.
The Public Service Loan Forgiveness Program was established in 2007, but it had been plagued by years of bureaucratic delays and other problems.
A report by the Consumer Financial Protection Bureau in 2017 found that federal loan servicers routinely failed to inform borrowers about their eligibility for the program and systematically miscounted payments that could count toward forgiveness.
The Biden administration revived the program, which has led to debt relief for nearly one million people.
The administration has also approved $14.1 billion in forgiveness for about 548,000 borrowers with a total and permanent disability that prevents them from working, a group that includes many military veterans.
Why is this issue tangled up in the courts?
Surveys have consistently found that a majority of Americans support some form of debt relief. But Republican attorneys general and conservative groups have tried to block Mr. Biden’s plans in court, saying he is overstepping his authority.
Critics of the debt relief plan characterize it as a taxpayer-funded giveaway.
The legal challenges have steadily chipped away at Mr. Biden’s ambitions.
At the beginning of his presidency, Mr. Biden promised to wipe out more than $400 billion in student debt for more than 40 million borrowers. The Supreme Court struck that down in June 2023, ruling that his administration did not have the authority to do so.
In April, Mr. Biden announced his new plan aimed at 30 million borrowers, but now that plan is caught up in legal challenges as well.