Supreme Court asked to allow Biden’s student loan forgiveness plan

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The Biden administration on Friday asked the Supreme Court to restore his student loan forgiveness programclaiming that its creation was well within the authority of the education secretary and that a lower court ruling suspending it ‘leaves millions of economically vulnerable borrowers in limbo’.

US Solicitor General Elizabeth B. Prelogar criticized a 3-0 decision on Monday by a panel of the United States Court of Appeals for the 8th Circuit. He sided with a coalition of six Republican-led states that have asked the court to file any debt forgiveness in ongoing litigation. The injunction shall remain in effect until further decision by that court or by the Supreme Court.

Prelogar said states do not have the legal standing to challenge the administration’s actions and that, in any event, federal law gives the secretary of education broad authority to make changes to the student loan program. in an emergency, such as a pandemic. Both the Trump and Biden administrations have invoked the law to suspend loan repayments.

“Congress expressly contemplated that national emergencies would necessitate student loan relief for affected borrowers, and Congress specifically authorized the Secretary to grant such relief without delay,” Prelogar wrote in the administration’s motion to court. . “Here, the Secretary determined that relief was needed to ensure that borrowers do not default on their payment obligations or enter into default when payment obligations resume, with potentially irreparable consequences for their credit. and their financial future.”

Read the administration’s filing with the Supreme Court

The 8th Circuit’s ruling came days after a federal judge in a separate trial in Texas declared President Biden’s debt relief plan illegal, effectively preventing the Department of Education from accepting more applications and paying off any debt. Administration attorneys have asked the United States Court of Appeals for the 5th Circuit to stay the decision in the Texas case and expedite its review.

Prelogar told the Supreme Court that if she chooses not to lift the 8th Circuit injunction, she should accept the case quickly and hear the merits of the legal arguments in February. While the court normally waits for the appeals process to unfold, it has chosen such a route to hear challenges to the administration’s immigration and vaccine policies. Hours after Prelogar was filed on Friday, the judges asked states to file a response by noon Wednesday.

Biden “can’t illegally impose college loan debt on millions of hard-working Americans who don’t owe the debt!” Arkansas Attorney General Leslie Rutledge (right), one of the officials who filed the lawsuit, wrote in a Tweeter Friday. “I’ve gone all the way to the Supreme Court to win before and I will again.”

Biden loan relief plan would cancel up to $10,000 in federal student debt for borrowers earning up to $125,000 a year, or up to $250,000 for married couples. Those who received Pell Grants are eligible for an additional rebate of $10,000. To date, more than 26 million people have applied for debt relief, and 16 million of those applications have been reviewed, according to the education department.

After six repayment extensions, pressure from Congress and activists, the White House acts on federal student loans. (Video: Michael Cadenhead/The Washington Post)

The Department of Justice issued a 25 page memo in August after the announcement of the relief program it says The program is authorized by a 2003 law, the Higher Education Relief Opportunities for Students Act (HEROES Act). The act authorizes the Secretary of Education “to mitigate hardship that federal student loan recipients may experience due to national emergencies.” It was adopted in response to the attacks of September 11, 2001, but has since been used in other emergency situations.

But Republican-led states and other opponents of the program argue that the scale of loan forgiveness, at a cost of about 300 billion dollars over 10 years, requires more specific authorization from Congress due to its economic and political importance.

The court case filed in September by six states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina – accuses the president of overstepping his authority and threatening the revenues of state entities that profit from federal student loans. At least seven lawsuits have been filed in an attempt to arrest him.

The 8th circuit decided there was standing, at least for Missouri, to take on the challenge on behalf of the Missouri Higher Education Loan Authority, a quasi-state organization that owns and administers federal student loans. The lawsuit said MOHELAwhich funds state scholarships, would lose revenue from servicing direct loans – those made and held by the federal government – ​​which are wiped out.

The states also asserted that MOHELA and state investment entities that hold debt from the former Federal Family Education Loan Program could be financially impacted if borrowers consolidate their debt into the loan program. directly to qualify for relief. The Biden administration declared such consolidations in late September would no longer be eligible for forgiveness.

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The panel also said the postponement of the program was justified because of “substantial legal issues that remain to be resolved” and that it would be too late to resolve them if the program worked.

Prelogar told the Supreme Court that the relationship between MOHELA and the state was too tenuous to recognize. And she rejected states’ claim that the program went beyond what Congress had authorized.

The loan forgiveness program for some, she wrote, was more targeted than Trump and Biden’s previous approach, which simply suspended debt repayment for anyone with federal student loans.

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After extensive study, Prelogar wrote, the Education Secretary found that reducing the principal owed by the most vulnerable borrowers “would mitigate the risk that delinquency and default rates would rise above pre-Secondary levels.” pandemic”, once payments resume. “The Secretary did so to ‘ensure’ an enumerated purpose of the Act: that borrowers ‘will not be placed in a worse financial position with respect to’ their loans.”

She rejected states’ arguments that more specific congressional authorization was required under the “major issues” doctrine, that the Supreme Court invoked last term to limit the power of the Environmental Protection Agency to fight climate change.

“Since its enactment in 2003, the Department has repeatedly invoked the HEROES Act to provide class-wide relief to certain borrowers, and since March 2020, the Trump and Biden administrations have invoked the law to provide relief. to all borrowers,” she wrote. . “Pandemic-related relief is estimated to have cost the government more than $100 billion.”

The case is Biden v. State of Nebraska, et al.

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