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Judge blocks part of SAVE loan forgiveness plans after Arkansas sues

As much as $3 billion in student debt could be forgiven in Arkansas as a result of President Joe Biden's new loan forgiveness plan.
Susan Haejin Lee
Billions in student debt will not be forgiven after a judge blocked parts of the SAVE plan from going into effect.

A judge has blocked part of a Biden era policy to forgive student loans.

The multi-state lawsuit was brought on by seven states including Arkansas, represented by Attorney General Tim Griffin. The suit was against President Joe Biden, Secretary of Education Miguel Cardona and the Department of Education.

The Savings on Valuable Education or “SAVE” plan changes the income threshold for paying back student loans. The plan also forgives loan borrowers after 120 payments if their balances are below $12,000. U.S. District Judge John Ross blocked that part of the law relating to loan forgiveness. It was set to take effect on July 1, and would have amounted to billions in loan forgiveness.

In a 61-page ruling, Ross said the president does not have power to forgive loans. He often referenced the recent Supreme Court case Biden v. Nebraska. The court ruled that Biden did not have the authority to offer blanket forgiveness for large numbers of student loans.

“Congress has made it clear under what circumstances loan forgiveness is permitted,” Ross said. “And the ICR plan is not one of those circumstances.”

The student loan company MOHELA argued that they would suffer “irreparable harm” if the forgiveness plan was allowed to go forward. He agreed with the company's allegation that they will be harmed financially.

“Those loan accounts will be closed and MOHELA will no longer collect administrative servicing fees,” the suit said.

Arkansas Attorney General Tim Griffin was pleased with the decision.

“With Independence Day fast approaching, another court has reminded President Biden that he is not a king,” Griffin said. “He can’t go around Congress and unilaterally cancel student loans. He should have learned that from Schoolhouse Rock.”

Note: Reporter Josie Lenora is currently enrolled in the SAVE plan.

Josie Lenora is the Politics/Government Reporter for Little Rock Public Radio.