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Thursday, December 7, 2023
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Biden urges Supreme Court to clear hurdles for student debt forgiveness plan

The application invites the justices to expedite the matter, similar to how the court handled vaccine mandate challenges last term. 

WASHINGTON (CN) — President Joe Biden asked the Supreme Court on Friday to put his student loan forgiveness program into action by overruling an injunction from the Eighth Circuit. 

The St. Louis-based federal appeals court stymied Biden’s plan to forgive up to $20,000 in student loan debt from certain U.S. borrowers at the start of the week, effectively blocking the administration from moving forward with a longtime policy goal for Democrats. This left borrowers in limbo, wondering if Biden’s proclamation would be reneged by a legal fight. 

“The Eighth Circuit’s erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations,” U.S. Solicitor General Elizabeth Prelogar told the justices in a 42-page application

While the Biden administration has asked the justices to vacate the Eighth Circuit’s injunction, it has also presented an alternative course of action if the justices were skeptical of that move. Prelogar invited the court to add the case to its docket and hear expedited arguments. An expedited briefing and argument schedule is unusual, but it is not unheard of. Last term the court heard expedited arguments in cases concerning abortion bans and vaccine mandates. Prelogar said this course of action would prevent prolonging the uncertainty of the plan’s future for borrowers. 

Biden relied on post-9/11 law to justify forgiving student loan debt. The Higher Education Relief Opportunities for Students Act of 2003 — better known as the Heroes Act — allows the education secretary to waive rules concerning student financial aid programs in times of war or national emergency. The financial impact of the Covid-19 pandemic led the Biden administration to conclude that student loan borrowers needed financial assistance, and paying down additional debt would leave them in worse financial positions. 

Since Biden’s highly anticipated August announcement, legal challenges have tried to put the kibosh on the program. Taxpayers from Wisconsin claimed the plan would impact all taxpayers, causing harm to them if the plan were to move forward. Another group of student loan borrowers claimed the plan would end up costing them more in the long run because their debt was already being forgiven by congressional legislation. Because of standing issues, all of these suits have failed to gain traction. 

The only case that has made any headway to stop Biden comes from six Republican-led states that say the plan is unwise and unfair to taxpayers. Like similar suits, the states’ challenge was shot down by a federal judge for lack of standing in October. U.S. District Judge Henry Edward Autrey, a Bush appointee, said none of the states could prove they would suffer concrete injuries if student loan debt was forgiven. 

But the states prevailed at the Eighth Circuit where a three-judge panel made up of one Bush appointee and two Trump appointees granted a preliminary injunction. The states claim Biden can’t use the Heroes Act to forgive debt in the wake of the pandemic. On the other hand, the Biden administration says that’s exactly what the law is for. 

“Because borrowers who default on their student loans face severe financial consequences — including wage garnishment, long-term credit damage, and ineligibility for federal benefits — Congress specifically authorized the Secretary to waive or modify any applicable statutory or regulatory provision as he deems necessary to ensure that borrowers affected by a national emergency are not worse off in relation to their student loans,” Prelogar wrote. 

Biden reminded the justices that he is not the only president to use the Heroes Act in this way: former President Donald Trump also used the law to pause loan payments. 

“Confronted with the deadliest pandemic in the Nation’s history, which has wreaked global economic havoc, both the Trump and Biden Administrations invoked the HEROES Act to pause repayment obligations and suspend interest accrual on all federally held student loans since March 2020,” Prelogar wrote. “That pause is estimated to have cost the government more than $100 billion.” 

Prelogar chastised the Eighth Circuit’s ruling, claiming its analysis was subpar. 

“The court’s discussion of the merits instead consisted, in its entirety, of the following statement: ‘[T]he ‘merits of the appeal before this court involve substantial questions of law which remain to be resolved.’ That analysis 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,” Prelogar wrote.

While Prelogar argues that the states lack standing, she also says the suit would fail on the merits. 

“On the merits, the plan falls squarely within the plain text of the Secretary’s statutory authority,” Prelogar wrote. “Indeed, the entire purpose of the HEROES Act is to authorize the Secretary to grant student-loan-related relief to at-risk borrowers because of a national emergency — precisely what the Secretary did here.” 

The justices asked the states to respond to Biden's application by Nov. 23.

Follow @KelseyReichmann
Categories / Appeals, Consumers, Financial, Government, National

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