U.S. high court debate set in student loan case
WASHINGTON — The Supreme Court agreed Thursday to decide whether the Biden administration had overstepped its authority with its plan to wipe out billions of dollars in student debt.
The justices put the case on an unusually fast track, saying they would hear arguments in February. In the meantime, though, they left in place an injunction blocking the program.
The court’s brief order gave no reasons and did not note any dissents.
The court acted after the Justice Department filed an emergency application asking the justices to lift the injunction, which had been issued by the U.S. Court of Appeals for the 8th Circuit, in St. Louis, at the request of six Republican-led states.
The program, which forgives up to $20,000 in debt for millions of federal borrowers, has set off a flurry of legal battles, but the one filed by the six states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — may represent the most serious threat. The states have said that Biden’s proposal exceeds his executive authority and would deprive them of future tax revenue.
Since March 2020, most borrowers have been able to skip payments under a coronavirus relief measure that
began under former President Donald Trump and was extended multiple times, including under President Joe Biden. Last week, the Biden administration again extended the pause on payments, pushing them until as late as September.
Nearly 26 million borrowers have applied to have some of their student loan debt erased. While the government has approved 16 million applications, no debt has been canceled yet. The Education Department, which owns and manages the government’s $1.5 trillion student debt portfolio, has stopped accepting applications in light of all the legal challenges.
The proposed debt cancellation would be one of the most expensive executive actions in U.S. history; the nonpartisan Congressional Budget Office estimated its cost at about $400 billion.
In response to the emergency application, lawyers for the states argued that the administration should not be allowed to use the coronavirus pandemic to justify its plan. They noted that the justices had rejected two earlier programs responding to the pandemic: an eviction moratorium and a plan to require large employers to impose vaccine or testing requirements on their workers.
“Now, while President Biden publicly declares the pandemic over,” the states’ brief said, his administration is “using COVID-19 to justify the mass debt cancellation — an unlawful attempt to erase over $400 billion of the $1.6 trillion in federal student-loan debt and eliminate all remaining loan balances for roughly 20 million of 43 million borrowers.”
The Biden administration maintains that it has the authority to grant relief under the Heroes Act of 2003, which allows the education secretary to waive regulations related to student loans during times of war or national emergency. Since the onset of the coronavirus pandemic in March 2020, the country has been operating under an emergency declaration, imposed by Trump.
The administration’s emergency application to the Supreme Court, filed by Solicitor General Elizabeth Prelogar, said the states had not suffered the sort of injury that would give them standing to sue.
The 8th Circuit, she wrote, had focused solely on the possibility that a nonprofit entity that services federal loans, the Missouri Higher Education Loan Authority, might fail to make payments to Missouri.
Prelogar said that possibility was not enough to establish standing and that, even if it was, the appeals court should have done no more than blocked the government from discharging loans serviced by the entity. The 8th Circuit instead shut down the entire program nationwide while the appeal moved forward.
Prelogar also criticized the 8th Circuit for its failure to discuss whether the administration had exceeded its authority beyond saying that the “merits of the appeal before this court involve substantial questions of law which remain to be resolved.”
“That analysis,” she wrote, “does not suffice to support any injunction — much less a universal injunction prohibiting the government from implementing a critically important policy with direct and tangible effects on millions of Americans.”
The states argued that the plan “is not remotely tailored to address the effects of the pandemic” and is instead aimed at fulfilling “the administration’s political agenda on student loans.”
The states lost the first round in their suit before Judge Henry E. Autrey of the Federal District Court in St. Louis, who was appointed by President George W. Bush.
“While plaintiffs present important and significant challenges to the debt relief plan,” Autrey wrote, “the current plaintiffs are unable to proceed to the resolution of these challenges.”
A three-judge panel of the 8th Circuit blocked that ruling. Two of its three members — Judges Ralph R. Erickson and Leonard S. Grasz — were appointed by Trump. The third, Judge Bobby E. Shepherd, was appointed by Bush.
In a separate case, a federal judge in Texas on Nov. 10 declared the forgiveness plan unlawful. The U.S. Court of Appeals for the 5th Circuit on Wednesday denied a request by the Justice Department to put a hold on that ruling while the court considers the merits of the administration’s appeal.
The legal battles have left millions of student loan borrowers in limbo. More than half of eligible people had applied for the forgiveness program before it was halted by the courts, with the Education Department approving some 16 million applications. Despite the hold on the program, the department recently notified people that their applications were approved, assuring them that the administration will discharge the debt if it prevails in court.
The loan relief plan would cancel up to $10,000 in federal student debt for borrowers earning up to $125,000 annually, or up to $250,000 for married couples. Those who received Pell Grants are eligible for an additional $10,000 in forgiveness.