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Red states fight Biden loan forgiveness at Supreme Court

Student loan borrowers are left in limbo while the justices consider Biden’s plea to begin canceling billions of dollars worth of debt. 

WASHINGTON (CN) — Republican-led states told the Supreme Court on Wednesday that President Joe Biden should be blocked from using his executive authority to cancel student loan debt from millions of Americans. 

Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina are at the helm of this challenge against Biden’s plan to forgive up to $20,000 in student loan debt from tens of millions of qualifying Americans. Their brief to the high court comes in response to an emergency application from Biden that urged the justices to reinstate his stymied plan. 

Biden had announced the plan in August to cancel some student loan debt in response to financial hardships the pandemic caused for borrowers. Using the Higher Education Relief Opportunities for Students Act of 2003 — a post-9/11 law nicknamed the Heroes Act — Biden instructed the education secretary to cancel some debt for borrowers so they didn’t fall into a more dire financial position. The Heroes Act allows the secretary to waive rules concerning student financial aid programs in times of war or national emergency. Someone confusingly, Covid-19-related economic woes led Congress to pass another bill called the Heroes Act in 2020, this one short for the Health and Economic Recovery Omnibus Emergency Solutions Act.

The states claim Biden’s use of the 2003 Heroes Act goes far beyond Congress’ intentions and follows a pattern of executive authority abuse the justices have already condemned. 

“The Administration is once again invoking the COVID-19 pandemic to assert power far beyond anything Congress could have conceived,” Nebraska Solicitor General James Campbell wrote in the states’ brief. “Previously, this Court stopped CDC’s eviction moratorium. Later, it stayed OSHA’s vaccine-or-test mandate.” 

Citing a declaration that the pandemic is over, the states argue Biden’s cancellation is more about fulfilling a longtime Democratic policy goal than responding to an emergency. 

“The Act requires a real connection to a national emergency,” Campbell wrote. “But the Department’s reliance on the COVID-19 pandemic is a pretext to mask the President’s true goal of fulfilling his campaign promise to erase student-loan debt. Hiding the real motive, the agency attempts to connect the cancellation to the pandemic by citing current economic conditions supposedly caused by COVID-19.” 

While Biden has argued that his actions are necessary to prevent financial peril for borrowers, the states claim he doesn’t have the authority to put borrowers in a more favorable financial position. 

“The Secretary uses it here to place tens of millions of borrowers in a better position by cancelling their loans en masse,” Campbell wrote (emphasis in original). “The Act does not allow the Secretary to effectively transform federal student loans into grants. It is telling that the Secretary has never before used the Act in this way.” 

Biden argues that the law has been used in this way before, noting that it cost the government an estimated $100 billion to pause student loan payments under former President Donald Trump at the beginning of the Covid-19 outbreak. Using the Heroes Act to protect student borrowers in this way, Biden argues, is exactly what Congress intended. 

“On the merits, the plan falls squarely within the plain text of the Secretary’s statutory authority,” U.S. Solicitor General Elizabeth Prelogar told the court in Biden’s application. “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.” 

While the Republican-led states are not the only group to challenge Biden’s plan, they have been the only ones to have any success at stopping him. Taxpayers from Wisconsin and a group of student loan borrowers fighting the plan failed to prove they had standing to bring lawsuits. 

The states faced a similar barrier at the district court in October, but Eighth Circuit revived their suit. A three-judge panel consisting of one Bush appointee and two Trump appointees halted Biden’s plan nationwide leaving Biden to petition the justices for relief. 

Biden’s application before the court seeks emergency relief from the court in the form of a stay of the lower court ruling. Prelogar also invited the justices to take an alternative course of action and add the case to their docket in an expedited manner. While this action would be abnormal, it would not be inconceivable. Last term the justices agreed to conduct a similar course of action in cases concerning abortion bans and vaccine mandates. 

On Tuesday the Biden administration extended the pause on federal student loan payments while the legal battle plays out. 

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