Supreme Court takes up debt-relief lawsuit

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The U.S. Supreme Court Building on September 6, 2022, in Washington, DC.

The U.S. Supreme Court will decide whether the Biden administration’s plan to forgive up to $20,000 in federal student loans for eligible Americans is legal.

Last month, the Biden administration asked the court to lift an injunction currently blocking the debt-relief plan. If the court wouldn’t lift the injunction, the administration wanted Justice Brett Kavanaugh to grant a petition for a writ of certiorari and for the Supreme Court to hear the case on an expedited schedule. Kavanaugh handles emergency applications for the U.S. Court of Appeals for the Eighth Circuit, which issued the injunction.

“Only prompt review by this court would avoid the prolonged uncertainty that the Eighth Circuit’s sweeping injunction would otherwise inflict on millions of vulnerable borrowers,” Solicitor General Elizabeth Prelogar wrote in a court filing this week.

Oral arguments in the case will be held in February as part of the court’s current session; meanwhile, the injunction remains in place, according to the court’s announcement Thursday.

The Biden administration is fighting several lawsuits challenging the debt-relief plan, which was first announced in August. The lawsuit now before the Supreme Court came from six mostly Republican-led states that argued the plan would harm state agencies that hold Federal Family Education Loans, such as the Missouri Higher Education Loan Authority (MOHELA), and states’ coffers, because taxes won’t be collected on discharged loans. In addition to Missouri, the other states involved in the suit are Arkansas, Iowa, Kansas, Nebraska and South Carolina.

In a court filing last month, the states argued that Kavanaugh should leave the injunction in place but supported granting the writ of certiorari if the court thought “the application presented close questions.”

Anticipating that the Supreme Court would take the case, President Biden extended the pause on student loan payments last month. Payments were set to resume Jan. 1 but are now paused through June 30—or sooner if the litigation is resolved before then.

Because of the extension, the states wrote in a brief that “no one will be harmed by leaving the injunction while this court reviews the case.”

Biden and other officials have repeatedly defended the plan’s legality. The administration has said Education Secretary Miguel Cardona has the authority to cancel debts under the Higher Education Relief Opportunities for Students, or HEROES, Act of 2003, which was passed after the Sept. 11 attacks and authorizes the education secretary to forgive student loans during specific periods such as a war or national emergency. The White House says the COVID-19 pandemic qualifies as such a national emergency.

The states have argued that the HEROES Act doesn’t allow for debt relief in the manner proposed.

“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’ Supreme Court brief states.

Briefs from outside groups for and against lifting the injunction have already started to pile up since the administration’s Nov. 18 application, including from a group of law professors, student loan experts and debt-relief advocates.

“The collective amici are on the front lines helping borrowers survive financial havoc wrought by the double whammy of the broken student loan system and COVID-19 pandemic,” said Persis Yu, deputy executive director at the Student Borrower Protection Center, in a news release. “We have faith that the Supreme Court will see through the political chicanery and allow this critical program to deliver the relief that 40 million working and middle-class borrowers desperately need.”

Dozens of Republican state attorneys general also submitted a brief in favor of keeping the injunction in place, arguing that the program is illegal because it wasn’t clearly authorized by federal statute.

“The program is part and parcel of the current administration’s modus operandi: invoking far-fetched legal arguments to launder abuses of executive authority, all in hopes that the courts will shrink from their role in checking executive abuse,” the brief says.

Several other lawsuits challenging the plan are still progressing through the federal court system and could soon reach the Supreme Court as well. Most recently, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit denied the administration’s request that it block a district judge’s ruling vacating the debt-relief program.

Prelogar previously wrote in court filings that if the Fifth Circuit denies a stay in that lawsuit, the administration will seek relief from the Supreme Court as well.

Editorial Tags:
Student debt
Image Source:
Anna Moneymaker/Staff/Getty Images
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