Biden’s Student Debt Forgiveness Hits Roadblock

Gage Skidmore from Surprise, AZ, United States of America, CC BY-SA 2.0 , via Wikimedia Commons

( – On Friday the New Civil Liberties Alliance (NCLA) sued the Biden administration over the newly introduced student loan income-driven repayment (IDR) plan.

This week the Education Department launched a website for its Saving on Valuable Education (SAVE) application, which includes the details of the IDR plan which is meant to assist student borrowers. Shortly after this release the NCLA on behalf of the Mackinac Center for Public Policy, and the Cato Institute filed in the U.S. District Court for the Eastern District of Michigan a lawsuit that would block this payment plan from going into effect.

According to the lawsuit the new repayment plan was a violation of the Constitution’s Appropriations Clause which gives Congress the right to control which of the debts to the Treasury are allowed to be canceled.

The SAVE plan is meant to help borrowers have student loan forgiveness. Under one of the plans, those borrowers with a student loan original balance of a maximum of $12,000 are allowed to have their remaining balance forgiven after they consistently make payments for 10 years. The NCLA in the lawsuit argued that through the plan the government was going to be canceling $39 billion at a faster speed than the one the court is able to review almost immediately. Over the years, 2.8 million additional IDR borrowers could also see their student loan debts canceled.

The new SAVE plan was announced only two months after borrowers were required to start making payments again to the student loans. During the COVID-19 pandemic, there had been a pause on repayments.

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