Federal Judge Allows SAVE Act Student Loan Repayment Case to Move Forward
A federal judge in Kansas issued a ruling
on a lawsuit
brought forth by 11 Republican-led states against the Biden administration’s Saving on a Valuable Education (SAVE) Plan, a student loan forgiveness and repayment plan. Judge Daniel Crabtree, in Wichita, determined that only three states—South Carolina, Texas and Alaska—had provided enough evidence to establish legal standing to challenge the plan in court. These states demonstrated that the plan would likely decrease revenue for public entities involved in education funding and student loans within their jurisdictions.
However, Judge Crabtree dismissed the arguments eight other states, led by Kansas, brought forward stating that they lacked standing to challenge the Biden administration's SAVE Plan. He rejected claims that the plan would diminish their income tax revenues or impede their ability to recruit state employees.
The crux of the legal challenge from the Republican-led states lies in their assertion that the Education Department lacked the authority to establish the SAVE Plan, rendering its creation unlawful. These states argue that the plan's implementation would negatively impact their taxable income. They further contend that the accelerated debt forgiveness under the SAVE Plan would result in missed taxable income opportunities. However, Judge Crabtree dismissed this argument, attributing any incidental effects on taxable income to the plaintiffs' own tax policies.
This ruling presented a mixed outcome for the Biden administration, which faces both this case and another lawsuit by seven states led by Missouri, challenging the debt relief program.
The SAVE Plan, announced by President Biden in 2022, offers more generous terms than previous income-based repayment plans. The plan’s primary goal is to lower monthly payments for eligible borrowers.