The Supreme Court rejected a Biden administration plea Wednesday that sought to revive the Savings on a Valuable Education (SAVE) plan to tackle federal student loan debt.
In a brief order, the court denied an emergency request filed by the administration that sought to lift a nationwide injunction imposed by an appeals court.
There were no noted dissents, CNBC reported.
The Education Department issued a regulation finalizing SAVE in July 2023, the month after the Supreme Court ruled that the administration lacked authority to implement President Joe Biden's earlier loan forgiveness program.
The new effort, like the previous one, was challenged by multiple conservative-leaning states.
The new proposal has several provisions, including one that would cap the amount people have to repay for undergraduate loans at 5% of their incomes. Previously the cap was 10%.
Opponents to SAVE say it would require spending up to $475 billion that was not authorized by Congress. They say it should be blocked for the same reason that the Supreme Court blocked Biden's earlier plan.
Under the "major questions" doctrine embraced by the court's conservative justices, federal agencies cannot initiate sweeping new policies that have significant economic effects without having authorization from Congress.
The states argue in court papers that the Biden administration's "assertion of unfettered authority to cancel every penny of every loan is staggering."
In an Aug. 9 decision, the St. Louis, Missouri-based 8th U.S. Circuit Court of Appeals issued a more sweeping injunction putting the entire plan, which has about 8 million borrowers on it, on hold.
The denial comes as the Biden administration’s 12-month “on-ramp” period for loan repayments approaches expiration on Sept. 30 following the end of former President Donald Trump’s pandemic forbearance a year earlier.
The Trump forbearance, which began in March 2020, allowed borrowers to stop making loan payments without incurring interest costs and getting reported to the credit agencies.
Once the Biden “on-ramp” period ends, student loan servicers can start reporting payment delinquencies on loans to credit agencies.
Biden’s “on-ramp” period, which began on Sept. 30 of last year, prohibited loan servicers from reporting late payments to credit agencies in an effort to give borrowers the chance to work loan payments back into their budgets after not paying them for 3.5 years, CNBC reported.
Price Action: Student loan servicers gave mixed reactions to Wednesday’s Supreme Court decision as of Wednesday’s late-afternoon trading.
Meanwhile, exchange-traded funds that hold SoFi shares registered losses.
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