Emirates Education Platform

Margaret Mia

Teacher

U.S. appeals court again blocks Biden debt-relief program


Last week a federal district judge ruled the Biden administration’s student debt relief plan unconstitutional. On Monday the U.S. Court of Appeals for the Eighth Circuit dealt an additional, and potentially more potent, setback to borrowers and to the White House.

The court’s decision essentially blocks debt relief for tens of millions of borrowers from taking effect unless and until the U.S. Supreme Court or the Eighth Circuit itself overturns Monday’s ruling, in which a three-judge panel unanimously backed a preliminary injunction blocking the administration’s plan to offer debt relief.

The Eighth Circuit had issued a temporary stay last month but ordered emergency arguments by the government and the six states (Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina) that had sued to block the plan, which the Biden administration announced in August.

The plan would cancel up to $10,000 in debt for Americans earning less than $125,000 and up to $20,000 for those who received a Pell Grant for students from low-income backgrounds. The plan is expected to affect more than 40 million borrowers.

The administration created the program citing the Higher Education Relief Opportunities for Students, or HEROES, Act of 2003. The White House said the Sept. 11–era law gave Education Secretary Miguel Cardona the ability to relieve student debts for those affected by a national emergency—in this case the COVID-19 pandemic.

But critics and those bringing the various lawsuits challenging the policy have argued that the 2003 act didn’t specifically mention loan forgiveness.

Attorneys general for the states that sued in the Eighth Circuit challenged the administration’s statutory authority to create the program and argued that the plan would harm state agencies that earn fees for holding and collecting federal student loans, such as the Missouri Higher Education Loan Authority (MOHELA), and impair the states’ finances, because taxes won’t be collected on discharged loans.

A lower court judge rejected the states’ lawsuit last month, saying the states did not have standing to challenge the policy.

In overturning that ruling Monday, the appeals panel ruled both that the states had legal standing to challenge the debt-relief plan and that letting the administration’s policy take effect could be more detrimental than blocking it for some period of time.

“Not only do the ‘merits of the appeal before this court involve substantial questions of law which remain to be resolved,’” the court ruled, “but the equities strongly favor an injunction considering the irreversible impact the secretary’s debt forgiveness action would have as compared to the lack of harm an injunction would presently impose.”

The panel also rejected the idea of limiting the injunction to just the six states that directly challenged the policy, as Education Secretary Miguel Cardona had requested in the case of a ruling against the policy.

“We conclude that, at this stage of the litigation, an injunction limited to the plaintiff States, or even more broadly to student loans affecting the States, would be impractical and would fail to provide complete relief to the plaintiffs,” the three judges said.

Reaction to the Ruling

Advocates for debt relief and some legal experts questioned the legitimacy of the Eighth Circuit’s ruling and suggested it reflected politics more than sound legal judgment.

Two of the three judges on the Eighth Circuit panel were appointed by President Donald Trump and one was appointed by President George W. Bush (as was the district court judge who originally sided with the Biden administration in the Missouri case).

Stephen I. Vladeck, the Charles Alan Wright Chair in Federal Courts at the University of Texas at Austin, asserted on Twitter Monday that the Eighth Circuit panel had used the wrong standard of analysis for a ruling of this kind and exemplified a “growing phenomenon” of “judges using procedural orders (and ignoring procedural obstacles) to block government policies to which they object, but without specifically explaining why those policies are unlawful.”

Mike Pierce, executive director of the Student Borrower Protection Center, said that in the Eighth Circuit’s balancing act gauging the potential impact of letting loan forgiveness proceed, “the narrow financial interests of the student loan industry … once again … trump the urgent economic needs of tens of millions of Americans with student debt.”





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U.S. appeals court again blocks Biden debt-relief program
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