Courts likely to kill student loan forgiveness

Sstudent debt relief for 40 million Americans is on hold indefinitely after another legal setback Monday — and legal experts warn the measure could be struck down by the courts before anyone sees debt relief.

A federal appeals court issued a preliminary injunction on Monday, hampering the program’s progress, further delaying up to $20,000 per person in debt forgiveness. As the case progresses, it could reach the US Supreme Court.

“It’s entirely possible that judges who are somewhat skeptical of executive action or administrative action could overturn it and enforce it,” said Michael Sant’Ambrogio, a Michigan State University law professor who studies administrative law, federal courts and constitutional law. “It’s a very real risk right now.”

The preliminary injunction comes days after the Department of Education stopped accepting new applications for debt forgiveness because a federal judge in Texas, hearing a separate case, block the programruling that it was “an unconstitutional exercise of the legislative power of Congress.”

The new ruling Monday by three Republican-appointed judges on the U.S. Court of Appeals for the Eighth Circuit in St. Louis was the result of a lawsuit by six Republican-led states that argued they would be harmed in lost tax revenue as a result of debt cancellation.

The states appealed a judge’s decision to dismiss their case, saying they lacked standing to sue.

But the Eighth Circuit Court of Appeals disagreed. The justices have yet to rule on the legal arguments in the case, but they concluded that Missouri, one of the six states, “probably has legal standing to bring its claim” and issued a preliminary injunction, noting that the case “will affect the financial to the millions of Americans with student loans, as well as those Americans who pay taxes to fund the government.

The new decision means the program will be suspended “until further order of this court or the United States Supreme Court,” the justices wrote.

The decision is a significant setback for Biden’s agenda, which has faced numerous legal challenges since the president announced the debt relief plan in August. Debt relief advocates have called on the Biden administration to extend the pandemic-related pause on student loan payments while the legal battle plays out.

As conservatives rack up court victories against Biden’s student debt relief plan, the president and other Democrats have indicated the policy is winning with voters. Biden said student debt relief — along with climate change and gun violence — was one of the key issues driving voter turnout in the 2022 midterm elections. So did Massachusetts Sen. Elizabeth Warren, who writes in New York times that student debt forgiveness “helped motivate young people to vote in near-record numbers.”

Sociologists are still analyzing data on youth voter turnout in 2022, but one thing is clear: Democrats countered the story despite political headwinds, including Biden’s low approval rating. Republicans are poised to take back the House, but by the slimmest of margins; The Senate will remain in Democratic hands after major victories in PennsylvaniaArizona and Nevada.

The White House said 26 million borrowers have applied for debt relief with the Department of Education stopped accepting applicationsand 16 million of those applications have been approved so far. In a statement Monday, White House press secretary Karin Jean-Pierre said the administration is “confident in our legal authority” and “will continue to fight these meritless lawsuits by Republican officials and special interests.”

What you need to know about this case

Legal experts were skeptical of this each claimant would have legal standing— meaning they suffered concrete, imminent harm — to challenge the student loan forgiveness program. Several judges have dismissed other cases for lack of standing, but these two recent decisions have changed that pattern.

The case before the Eighth Circuit was brought by six Republican-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — which argued that Biden did not have the authority to cancel student debt altogether and that they would suffer lost tax revenue because of canceling the long.

U.S. District Judge Henry Autry, who dismissed the case in October, said the states had presented “important and substantial challenges to the debt relief plan” but lacked legal standing because “the program’s effect on future taxation is uncertain.”

The justices’ decision Monday focused on the Missouri Higher Education Loan Authority (MOHELA), one of the nation’s largest student loan servicers, which handles student loan billing and payments on behalf of the government.

The Eighth Circuit judges concluded that MOHELA “may be an arm of the state of Missouri” and said its revenue would decline due to widespread debt cancellation.

“This unexpected financial downturn will prevent or delay Missouri from funding higher education at its public colleges and universities,” the judges wrote, adding that student debt cancellation “poses a threat of financial harm” to the state.

The lawsuit challenges Biden’s authority to cancel student debt. The Biden administration justified the plan under the Higher Education Opportunities for Students (HEROES) Act of 2003, which gives the Department of Education the ability to change student financial aid programs during a “national emergency” — in this the case of the COVID-19 pandemic.

But there has been wide debate about this legal rationale. Once the plaintiffs get standing, Sant’Ambrogio believes there are “some important questions” about whether Biden has the authority to launch the program, and he wouldn’t be surprised if the U.S. Supreme Court ends up striking it down, given previous court rulings against executive actions.

“I think it’s entirely possible that they feel it’s outside the legal authority of the administration,” he says.

Luke Herrin, an assistant professor of law at the University of Alabama who is an expert on student loan law and an advocate for student debt cancellation, thinks this case is more likely to succeed than others, but he’s still skeptical. that the Supreme Court will find that the plaintiffs have standing to bring suit.

He was initially optimistic that legal challenges to Biden’s plan would fail. But recent decisions have made him “increasingly pessimistic” about the program’s fate.

“The Department of Education has not made clear what their escape hatch will be,” he says. “But it’s unclear when or if there will be a reversal in the near future.”

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Write to Katie Riley c [email protected].

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