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The Biden administration on Friday asked the Supreme Court to reinstate its federal student loan program after a federal appeals court issued an injunction against the plan.
That ruling by the federal appeals court for the 8th Circuit in St. Louis was the latest in a series of legal challenges to President Joe Biden‘s plan to cancel up to $20,000 in student debt for millions of Americans. The Biden administration stopped accepting applications for its relief earlier in the month after a federal district judge in Texas struck down its plan last week, calling it “unconstitutional.”
In the case at issue in the 8th Circuit, another federal judge rejected the challenge to the debt relief program brought by the six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. The judge ruled that while the states raised “important and significant challenges to the debt relief plan,” they ultimately lacked legal standing to pursue the case.
Standing refers to the idea that a a person or entity will be affected by the action they seek to challenge in court.
The GOP-led states appealed after their lawsuit was denied.
A three-judge panel on the 8th Circuit then ruled Monday that Missouri had shown a likely injury from the administration’s program, pointing out that a major loan servicer headquartered in the state, the Missouri Higher Education Loan Authority, or MOHELA, would lose revenue under the plan. Missouri’s state treasury department receives money from MOHELA.
The Biden administration slammed the legal challenge by the Republican states and the appeals court’s ruling.
“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,” it wrote in a filing with the Supreme Court.
Prelogar also wrote that if the Supreme Court declines to vacate the injunction, it could consider Friday’s filing as a petition to the high court to hear the Biden’s administration appeal of the decision by the lower court. And if the Supreme Court accepts the administration’s appeal, if could “set this case for expedited briefing and argument this Term,” she wrote.
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A top official at the U.S. Department of Education recently warned that there could be a historic rise in student loan defaults if its forgiveness plan is not allowed to go through.
“These student loan borrowers had the reasonable expectation and belief that they would not have to make additional payments on their federal student loans,” U.S. Department of Education Under Secretary James Kvaal wrote in a court filing. “This belief may well stop them from making payments even if the Department is prevented from effectuating debt relief,” he wrote.
“Unless the Department is allowed to provide one-time student loan debt relief,” he went on, “we expect this group of borrowers to have higher loan default rates due to the ongoing confusion about what they owe.”
This is a developing story. Please check back for updates.