If you’re one of the millions waiting for the debt forgiveness program touted by President Biden, you are in for a long, long wait.
Why? According to various news outlets and reports on Nov. 17, student debt forgiveness for 40 million Americans is on hold indefinitely after another legal setback on Monday—and legal experts are reporting the measure will be killed by the courts before any student sees debt relief.
A federal appeals court issued a preliminary injunction on Monday preventing the program from going ahead, which equates to delaying up to $20,000 per person in debt forgiveness. As the case moves ahead, there is a chance it could even be heard by the U.S. Supreme Court.
“It’s entirely possible that judges that are kind of skeptical of executive action or administrative action would strike it down and enjoin it,” says Michael Sant’Ambrogio, a law professor at Michigan State University, who studies administrative law, federal courts, and constitutional law said in this report. “That’s a very real risk at the moment.”
The preliminary injunction comes after the Education Department halted accepting new applications for debt forgiveness due to the federal judge in Texas, considering a separate lawsuit, blocking the program, ruling that it was an “an unconstitutional exercise of Congress’s legislative power.”
The new ruling on Monday, by three Republican-appointed judges on the U.S. Court of Appeals for the Eighth Circuit in St. Louis, is the result of a lawsuit by six Republican-led states, who argue that they will be harmed by lost tax revenue as a result of debt cancellation, according to reports.
The states had appealed a decision by a judge who had dismissed their lawsuit, saying they lacked standing to sue.
However, the Eighth Circuit Court of Appeals disagreed and the judges have not yet ruled on the legal arguments in the case, but they concluded that Missouri, one of the six states, “likely has legal standing to bring its claim” and granted a preliminary injunction, noting that the case “will affect the finances of millions of Americans with student loan debt as well as those Americans who pay taxes to finance the government,” reports say.
The new ruling means the program will be put on hold “until further order of this court or the Supreme Court of the United States,” the judges wrote.
The decision is a major blowback to Biden’s program, which has faced numerous legal challenges since Biden announced the debt-forgiveness plan in August. Advocates for debt relief have asked the Biden Administration to extend the pandemic-related pause on student loan payments while the legal battle continues.
While conservatives are gaining legal victories against Biden’s student debt forgiveness plan, Biden and various Democrats say the policy is a win with voters. Biden said student debt relief, climate change, and gun violence are supposed to be key issues that attracted votes to the midterm elections in 2022.
In another report, it is said the White House said 26 million borrowers applied for debt relief before the Education Department stopped accepting applications, and 16 million of those applications were approved to date.
Lawsuit Info to Know
Legal experts have said any plaintiff would have legal standing—meaning they suffered a concrete, imminent injury — should challenge the student loan forgiveness program. Several judges have rejected other lawsuits because of lack of standing, but these two latest rulings changed all that.
The lawsuit before the Eighth Circuit was brought by six Republican-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina — which argue Biden lacks the authority to broadly cancel student debt, and that they will suffer lost tax revenue due to debt cancellation.
U.S. District Judge Henry Autrey, who tossed the lawsuit in October, said the states had presented “important and significant challenges to the debt relief plan,” but lacked legal standing because the program’s “effect upon future taxation is uncertain,” according to reports.
Missouri Higher Education Loan Authority
On Monday, the judge’s ruling was about the Missouri Higher Education Loan Authority, one of the country’s largest student loan servicers, which makes billing and student loan payments on behalf of the government.
The Eighth-Circuit judges concluded that MOHELA “may well be an arm of the State of Missouri” and said its revenue will decrease because of widespread debt cancellation.
“This unanticipated financial downturn will prevent or delay Missouri from funding higher education at its public colleges and universities,” the judges wrote, adding that student-debt cancellation “presents a threatened financial harm” to the state, according to reports.
The lawsuit challenged Biden’s authority to cancel student debt. The Biden Administration justified the plan under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, which allows the Education Department to change student financial assistance programs during a “national emergency” — in this case, the COVID-19 pandemic.
But there’s been broad debate about that legal justification. Once plaintiffs are granted standing, Sant’Ambrogio thinks there are “some significant questions” about whether Biden has the authority to carry out the program, and he wouldn’t be surprised if the U.S. Supreme Court strikes it down, given previous rulings by the court against executive actions.
Sources: Yahoo News, various news reports, press releases, and articles.