The plan will remain on hold as the court deferred action on the administration’s request to restore it.
The Biden plan would cancel up to $20,000 in federal student loan debt for more than 40 million borrowers. The US Court of Appeals for the 8th Circuit had granted the request of a coalition of six Republican-led states to impose a nationwide injunction on the plan amid ongoing litigation.
In a separate case, a federal judge in Texas on Nov. 10 declared the forgiveness plan unlawful. The US Court of Appeals for the 5th Circuit on Wednesday denied a request by the Justice Department to put a hold on that ruling while the court considers the merits of the administration’s appeal.
Another appeals court rejects bid to revive Biden student loan relief
The legal battles have left millions of student loan borrowers in limbo. More than half of eligible people had applied for the forgiveness program before it was halted by the courts, with the Education Department approving some 16 million applications. Despite the hold on the program, the department recently notified people that their applications were approved, assuring them that the administration will discharge the debt if it prevails in court.
The loan relief plan would cancel up to $10,000 in federal student debt for borrowers earning up to $125,000 annually, or up to $250,000 for married couples. Those who received Pell Grants are eligible for an additional $10,000 in forgiveness.
The issue comes before a skeptical court of the administration’s authority to impose pandemic-related relief without express approval from Congress.
In 2021, the court revoked a national moratorium on evictions imposed by the Centers for Disease Control and Prevention that started during the Trump administration and was extended by Biden. In January of this year, it halted the administration’s vaccination-or-testing requirement for the nation’s largest employers, saying such a command exceeded the authority of the Occupational Safety and Health Administration.
Republican attorneys general of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina said this was another case of overreach.
“While President Biden publicly declares the pandemic over, the Secretary and Department of Education are using COVID-19 to justify the Mass Debt Cancellation — an unlawful attempt to erase over $400 billion of the $1.6 trillion in federal student-loan debt and eliminate all remaining loan balances for roughly 20 million of 43 million borrowers,” the states said in their filing to the Supreme Court.
Solicitor General Elizabeth B. Prelogar said the states did not have the legal standing to challenge the administration’s actions, and that federal law gives the education secretary broad authority to make changes in the student loan program. The Trump and Biden administrations both invoked the law to suspend loan repayments during the pandemic.
“Congress authorized the Secretary of Education to respond to national emergencies by providing relief to affected student loan borrowers,” Prelogar wrote in a filing to the court. “Without making any finding that the Secretary exceeded that express statutory authority, the Eighth Circuit issued a nationwide injunction preventing the Secretary from granting critical relief to millions of Americans suffering the continuing economic effects of a global pandemic.”
The Biden administration on Nov. 23 extended the student loan repayment pause into the new year. “It isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the courts consider the lawsuit,” Biden said.
Payments are now set to resume 60 days after the Education Department is allowed to implement the program or the litigation is resolved. If that hasn’t happened by June 30, payments will resume 60 days later or on Sept. 1, according to the department.
The Biden administration had initially encouraged borrowers to apply for debt relief by Nov. 15, when the moratorium was scheduled to end Dec. 31, in hopes their applications would be processed before the pause was lifted. That could have given the Education Department enough time to recalculate borrowers’ monthly payments based on their new balances.
The vast majority of federal student loan borrowers have been spared from monthly payments and interest accruing on their debt since Congress passed the pandemic-relief Cares Act in March 2020. The Trump administration extended the pause twice, while Biden did so six times.
Labor unions, civil rights groups and student debt activists had pressured Biden to refrain from collecting loan payments while the debt relief program is in legal limbo. Many of those same groups have filed briefs urging the Supreme Court to reinstate the program.
“The Biden administration’s student debt relief plan is a lifeline for millions of educators, nurses, public employees, and other working people — folks who carried us through the pandemic and who make our economy run every day,” said Randi Weingarten, president of the American Federation of Teachers, which filed a brief in support of the plan. “But obstructionist ideologues are playing politics with their futures and misusing the legal system, simply to stop progress and worse to deny President Biden an achievement that would help millions of people.”
The case is Biden v. Nebraska.