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Wednesday, December 6, 2023
Courthouse News Service
Wednesday, December 6, 2023 | Back issues
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GOP states argue for injunction against Biden student loan forgiveness plan

The Republican-led states told a federal judge that a 2003 law does not give the president or Department of Education the authority to cancel up to $20,000 of federal student loan debt per borrower.

ST. LOUIS (CN) — A federal judge on Wednesday compared a group of Republican states suing President Joe Biden over his federal student loan forgiveness program to baking a cake without a pan.

“You can have the ingredients for a cake, but it's kind of hard to make a cake if you don't have a pan to put the cake in,” U.S. District Judge Henry Autrey said when questioning the states' attorney on Biden’s standing as a defendant during a two-hour hearing in St. Louis that was broadcast live on YouTube as part of a pilot program.

“The consolidation, the best we can tell, originated with a directive from the president to the secretary to the Department [of Education] and so we were suing everyone in that chain,” replied Nebraska Solicitor General James Campbell, who represented the plaintiffs.

The hearing was held to consider a motion for a preliminary injunction prohibiting the government from implementing Biden’s plan, which would grant between $10,000 and $20,000 of student loan relief to qualified borrowers.

The motion is part of a lawsuit filed in September by Nebraska and five other states that seeks to stop the program unveiled by Biden in August. The lawsuit argues the plan will hurt an already struggling economy and will provide no relief to the working class and the poor.

Campbell argued the Biden administration violated and exceeded the intent of the HEROES Act, which when originally passed in 2003 provided economic relief for education costs to military members who responded to national emergencies such as 9/11. A law with the same name was passed in 2020 to provide similar relief to those affected by the Covid-19 pandemic.

“The agency is trying to do this, despite the fact that Congress has repeatedly rejected bills that would have achieved the same goal,” Campbell said. “So, the defendants here are just not content to leave this in Congress's own hands. What they're trying to do is go around Congress and this they can't do. They claim that they have authority in the HEROES act. But the HEROES Act is a statute that gives specific authority to help specific people that are facing harms from a national emergency.”

He added, “It does not allow the administration to use that statute in response to the end of a national emergency to benefit practically every borrower in the country.”

Brian Netter, an attorney with the Department of Justice representing Biden and the Department of Education, disagreed that the pandemic was no longer impacting Americans.

“I certainly don't see any part of the statute that says that if there's a hurricane, you can only provide people relief while the hurricane is still spinning,” Netter said. “But in an ordinary context, for a national emergency, something happens and people have to dig out from whatever that emergency was, and that's the concept of the statute here.”

He cited data showing that the economic fallout of the pandemic remains even if hospitals aren’t currently overrun with patients.

“The secretary also considered historical evidence stemming from other payment pauses, for example, in the case of hurricanes or wildfires and recent circumstances in which payments were paused because of national emergencies, the default rates skyrocketed when the payment pause ended, rising from 0.3% to 6.5%,” Netter said. “That's a 21-fold increase.”

Autrey, a George W. Bush appointee, questioned Netter on whether the HEROES Act defined what a national emergency is.

“The suggestion that it was impossible to contemplate that the authority of the secretary of education, which had long been understood to include the authority to release debts, would have been somehow excluded from the authority of the HEROES Act is unsupported by history,” Netter said. “And here with respect to the question of the national emergency, there's no dispute on either side of this case that President [Donald] Trump's declaration of a national emergency, which has been extended through the present date, satisfies the statutory requirements here.”

Campbell pointed to a rationale memo that outlined the government’s authority to implement the program, which he argued did nothing but show the arbitrary nature of the defendants' actions. For example, Campbell said the memo did not consider other reasonable alternatives.

Autrey questioned Campbell on what the plaintiff states would consider reasonable alternatives.

“We would have been OK with continuing forbearance, for example, because that would have been a non-agency action and wouldn't then be something we could challenge,” Campbell answered.

The solicitor general said the forgiveness program was too broad and could end up helping millionaires.

“Someone who is in a household earning say $240,000 a year in 2020, and then they got a massive promotion at work, and now they're earning roughly a million dollars a year in 2021, and roughly $2 million a year in 2022, that person is eligible for this cancellation,” Campbell said.

Netter said the court can’t rule on hypothetical scenarios.

“The only way to administer a program of this magnitude is to set standards and not to have a narrow tailoring sense of overbreadth that is practically unavailable and is specifically not required under the terms of this statute,” Netter said.

The judge asked Netter what the expected economic impact of the plan would be. Netter answered around $300 billion, roughly the same impact that the forbearance programs have had.

Campbell argued that private lenders would suffer irreparable harm from the program in lost revenues that could not be recouped. Netter countered that 90% of student loans are within the $1.6 trillion portfolio currently managed by the Department of Education.

Autrey ended the hearing by taking the arguments under advisement and telling the parties that “you’ll hear from me soon.”

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Categories / Education, Government, National, Politics

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