Groups Challenge Biden’s Student Debt Relief Plan in Court

Courts from the lower federal district courts to the U.S. Supreme Court have thawed efforts to eliminate the Biden administration’s student debt relief plan.

The Federal District Court of Eastern Missouri rejected efforts to overturn the federal student loan debt relief program. Several cases have been filed against the program. However, State of Nebraska et al. v. Joseph R. Biden, Jr. et al., filed in the Eastern Missouri District Court by the Republican Attorneys General of six states (Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina), was the most prominent case thought to have the best chance to successfully challenge the program.

The Attorneys General sought an injunction against the program to prevent it from canceling federal student loan balances. They had a two-pronged argument. First, the Biden administration overreached its executive authority by canceling student loans under the auspices of the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act), a law created to give the president authority to cancel or modify student loans after natural disasters or national emergencies. The Attorneys General argue that the law was meant to address emergencies such as terrorist acts, and the current public health emergency cited by the Biden administration as the basis for the student loan cancelations does not qualify as an emergency under the HEROES Act. Second, MOHELA, Missouri’s student loan servicer which is part of its state government, could see a drop in revenue caused by borrowers consolidating and transferring their federally guaranteed student loans back to the federal government. Thereby causing the state harm due to the potential drop in revenue.

In an attempt to weaken the case, the Biden administration said it would exclude loans held by private lenders, such as Missouri’s loan servicer, from the student loan debt relief program.

The case was argued on Oct. 12. Last week, the judge ruled against the Attorneys General. Though the court did not rule on whether the Biden administration’s reliance on the HEROES Act was overreach, the court rejected their request for an injunction. The judge ruled that the Attorneys General “had not suffered injuries of the sort that gave them standing to sue.” Specifically, “Missouri has not met its burden to show that it can rely on harms allegedly suffered by MOHELA,” and thus had no sufficient grounds to bring the case.

The states appealed the decision, and Friday evening, the Eighth Circuit Court of Appeals issued the stay while it considers a motion from the states to block the program. The stay ordered the Biden administration not to act on the program while it considers the appeal. The Biden administration continues to encourage people to apply for the program because the stay did not halt the acceptance of applications, it only prevents the program from actually moving forward with cancelling the loans.

In another case, the Brown Country Tax Payer Association (BCTPA), a group based in Wisconsin working to bring information and awareness to issues that affect tax policy or impose regulatory burdens, filed a lawsuit against the Biden administration. They asserted that the student loan debt relief program violates the U.S. Constitution’s separation of powers between Congress and the Executive branch and breaches the 5th Amendment’s equal protection doctrine by expressly stating that the program’s purpose is to advance “racial equity.” BCTPA also requested a temporary injunction blocking the program’s implementation. The lower court dismissed the case due to lack of standing and subsequently denied the injunction due to BCTPA’s inability to prove harm.

Both the case and the injunction were appealed to the U.S. Court of Appeals for the Seventh Circuit. The appeals court chose not to intervene in the injunction denial. The case, however, is pending review.

BCTPA then appealed the injunction’s denial to the U.S. Supreme Court on an emergency basis. The appeal was based on the assertion that the student loan debt relief program was an overreach of executive power. Associate Supreme Court Justice Amy Coney Barrett denied the appeal with no comment and without a referral to the full court.