Biden’s Student Loan Repayment Plan Is Being Challenged. Here’s What to Know.

When President Biden announced his plan to provide student debt relief for 43 million borrowers nearly two years ago, there was a piece to his program that attracted less attention: a new student loan repayment program that would cut monthly payments in half for millions.

The repayment program, called SAVE, was meant to become a permanent fixture of the federal student loan system, offering a more affordable path to repayment, particularly for lower-income borrowers. But two groups of Republican-led states have filed separate lawsuits to block the SAVE program — including many of the states that challenged Mr. Biden’s $400 billion debt cancellation plan, which was struck down by the Supreme Court last year.

Missouri, along with six other states, filed suit on Tuesday in the U.S. District Court for the Eastern District of Missouri, seeking to upend the program. That follows a challenge filed by 11 other states, led by Kansas, in late March. Both suits argue that the administration has again exceeded its authority, and the repayment plan is just another backhanded attempt to wipe debts clean.

“Yet again, the president is unilaterally trying to impose an extraordinarily expensive and controversial policy that he could not get through Congress,” the plaintiffs said in the complaint filed in Missouri.

The latest legal challenge landed just a day after the Biden administration renewed its efforts to offer more extensive debt relief in an attempt to make good on a campaign promise during an election year. That effort, which joins existing programs offering targeted relief, is also expected to be challenged.

The SAVE plan, which opened to borrowers in August and has more than eight million enrollees, isn’t a novel idea: It’s an income-driven repayment program based on a roughly 30-year-old design that ties borrowers’ monthly payments to their income and household size. But SAVE has more generous terms than previous plans. Already, 360,000 enrollees have received approval to have the remainder of their debts canceled, totaling $4.8 billion, after having made payments for 10 to 19 years.