The Supreme Court issued a landmark ruling overturning the Chevron doctrine, which has given deference to federal agencies for 40 years when it comes to interpreting laws. This decision will have far-reaching implications for various federal programs, including student loan forgiveness and repayment options. The ruling specifically impacts the Biden administration’s new SAVE plan, which provides income-driven repayment plans for borrowers. Republican-led states have challenged the program in lower courts, resulting in preliminary injunctions blocking key elements of the plan, including lower monthly payments and loan forgiveness.
The Supreme Court decision could further jeopardize the future of student loan forgiveness and income-driven repayment plans. The Education Department has relied on a 1993 provision of the Higher Education Act to establish various repayment options, including the SAVE plan. However, opponents argue that the statute is ambiguous regarding the parameters of these plans, potentially exceeding the maximum limits set by Congress. With the Chevron deference now eliminated, federal courts will have more authority to interpret ambiguous statutory language, increasing the risk for programs like the SAVE plan to be deemed unauthorized.
Borrowers currently enrolled in the SAVE plan can continue, but student loan forgiveness is on hold pending further legal developments. The Biden administration has appealed the preliminary injunctions in Missouri and Kansas, and the cases are expected to be heard in federal appeals court. However, the recent Supreme Court ruling on Chevron will complicate the administration’s defense of the SAVE plan. The Education Department will have to navigate the challenges of defending the program without the Chevron deference that previously protected agency interpretations.
As the legal battles over student loan forgiveness and repayment plans continue, the Supreme Court may eventually have to review the cases. With conflicting rulings in different federal circuits and the recent overturning of Chevron, the Education Department faces an uphill battle in defending the programs derived from the 1993 statutory authority. While borrowers currently in the SAVE plan can stay enrolled, the future of loan forgiveness and repayment options remains uncertain as legal challenges persist. The administration will need to navigate the changing legal landscape to protect these vital programs for student loan borrowers.
