State AG Wilson wins fight to halt student loan forgiveness. Here’s what it means for SC BY TED CLIFFORD UPDATED JUNE 26, 2024 5:17 PM A federal judge has temporarily blocked the Biden Administration’s plan for student loan forgiveness following a lawsuit by the South Carolina Attorney General’s Office and ten other Republican attorneys general. The preliminary injunction, signed by Kansas District Court Judge Daniel Crabtree, a President Obama nominee, halts parts of a plan set to go into effect on July 1. The Saving on a Valuable Education Plan, or SAVE, was designed to lower monthly payments for most student loan borrowers, reduce the amount of interest that needed to be paid and provide pathways to loan forgiveness for borrowers who took out smaller amounts of money. The pause could impact several hundred South Carolinians. In the state, 764,300 student loan borrowers owe an average of $37,551, according to the Education Data Initiative, a research team that compiles federal data on the U.S. education system. This is higher than the national average of $37,088, and a larger percentage of the population carries student loan debt, according to the Education Data Initiative. Crabtree’s order “does not decide whether student loan forgiveness is good policy or bad policy,” but acknowledged that it was not clearly authorized by Congress, the judge wrote. While the ruling placed an injunction on the parts of the SAVE Plan yet to go into effect, it does not unwind any parts of the plan that have already been implemented. In his ruling, Crabtree wrote that the lawsuit has been brought “long after” the Biden Administration had implemented parts of the plan. “The court doesn’t see how plaintiffs can complain of irreparable harm from them,” Crabtree wrote. On X, formerly known as Twitter, Wilson celebrated the decision. “Today was a huge win for South Carolina as a judge ruled with us in the fight against the Biden Administration’s illegal student loan forgiveness!” The Biden Administration and defenders of the plan have said that reducing and canceling student loans increases both spending and saving. Critics have argued that it will impact government revenues and could drive inflation. Wilson wrote: “Many families are feeling the daily effects of inflation, and I will continue fighting to ensure others’ student loan payments aren’t put on the backs of taxpayers.” This is the second time Wilson has sued to stop student loan forgiveness. After the U.S. Supreme Court blocked the Biden administration’s first effort, the South Carolina Attorney General’s Office joined with Kansas, Alabama, Alaska, Idaho, Iowa, Louisiana, Montana, Nebraska, Texas and Utah to stop the Biden administration’s second effort to forgive federal student loans. In June, Crabtree found that only South Carolina, Texas and Alaska had standing in the case. Wilson has called loan forgiveness “an outlandish campaign promise” and accused the Biden administration of “illegal federal overreach.” Among other harms, the complaint said that the SAVE plan would effectively eliminate the Public Service Loan Forgiveness Program, which cancels loans for those who work in public service after ten years. In its complaint, the attorney general’s office wrote that the state relies on the program to recruit teachers. But citing a report from the S.C. Department of Education, the attorney general’s office admitted “teachers report they often do not make enough money to afford monthly student loan payments upon graduation forcing them to pursue careers outside of education.” “Recruiting and retaining talent is difficult enough; removing the incentive of PSLF would strike another crushing blow to the South Carolina public education system,” according to the complaint. The SAVE Plan was designed around income-driven repayment, which would calculate a borrower’s monthly repayment amount based on discretionary income. Among other features, the SAVE plan included a pathway for loan forgiveness for borrowers who took out loans of $12,000 or less. It also would have covered unpaid interest so long as the monthly scheduled principle payment was made in full and on time. The average student loan accrues $27,000 in interest alone over 20 years, according to the Education Data Initiative, meaning almost half of the average borrower’s costs are just in interest. “The student loan debt relief is really unconscionable INTEREST relief for folks who long paid off what they actually borrowed” wrote state representative Justin Bamberg, D-Bamberg, in a post on X criticizing Wilson’s announcement.
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