President Biden’s new massive student loan relief plan is having a terrible, terrible, no good, very bad day. That’s because two separate federal district courts ruled against its legality in lawsuits brought by a different coalition of Republican-led states. Additionally, both judges who issued the ruling were appointed by Democrat Barack Obama. This makes it difficult to argue that these decisions are the result of ideology or partisanship, which is a very bad sign for the government’s chances of winning on appeal.
The new loan forgiveness program, known as the SAVE program, is a follow-up to a program invalidated by the Supreme Court that would have forgiven at least $156 billion in federally backed student loan debt Biden v. NebraskaLast year, the administration acted without congressional authorization (the plan would have forgiven about $430 billion in student debt).
While the administration claimed last year’s program was authorized by the 2003 HEROES Act, they defended the new program as an exercise of authority granted by the 1965 Higher Education Act. Both are vulnerable to language to justify spending large sums of money and under the “significant issues” doctrine, which requires Congress to “speak clearly” when authorizing the executive branch to make “decisions of significant economic and political significance.” It was therefore foreseeable (and indeed foreseen) that the new scheme would likely suffer the same fate as the old scheme if challenged in court, and that is what happened today.
exist Missouri v. BidenFederal District Judge John A. Ross issued a preliminary injunction blocking the portion of the plan that would forgive debt, not just restructure it. He first must address the issue of “status” — whether Missouri and other plaintiff states may have suffered “injury” from the plan. Standing is a major problem Biden v. NebraskaThe Supreme Court addressed the issue with a ruling, ruling that Missouri qualifies because it has a state agency—the Missouri Higher Education Loan Administration (MOHELA)—that services federally backed student loans if: situation, MOHELA’s revenue will be reduced: some of the loans are forgiven. In a previous article, I argued that Missouri could use the exact same reasoning to challenge the new plan. Judge Ross agreed:
Here, the plaintiff has filed a lawsuit against MOHELA and
So to Missouri. The allegations in the complaint are substantially similar, if not identical, to those the Supreme Court ruled last year were sufficient to establish Missouri’s status. Biden v. Nebraska. The court saw no reason to arrive at a different result here.
Final rule calls for accelerated loan forgiveness for low-rate borrowers
An initial principal balance that elects to be repaid through the SAVE plan and makes a certain number of qualifying payments. To the extent that accounts serviced by MOHELA are subject to this early forgiveness—it is not disputed that MOHELA does service such accounts—MOHELA will lose revenue from administrative service fees when these accounts are forgiven .
If Missouri had standing, the court concluded, it would not need to issue a valid ruling for the other plaintiff states (again following Biden v. Nebraska).
On the merits of the case, Judge Ross held that the SAVE program exceeded the scope of the statutory authorization:
According to the defendant, Congress intended to grant the Secretary [of Education] HEA has the authority to forgive the loan balance in the ICR [income contingent repayment] The scheme establishes a maximum repayment period of 25 years or “such extended period as the Minister may prescribe”. 20 USC § 1087e(d)(1)(D)… Under this purported authority, the Secretary has been providing loan cancellation for loans in the ICR program since the first ICR regulations became effective in 1995.
Despite this history, the plain language of the statute does not support defendants’ position.
Courts are not free to substitute unenacted legislative intent for the language of a statute…. Indeed, loan balance forgiveness is provided after 25 or even 10 years
Repayments to borrowers under the SAVE scheme will ensure that fewer borrowers default or default. Therefore, these loan forgiveness provisions are consistent with the Secretary’s express purposes in developing the final rule. But since the statute does not provide for loan forgiveness under the ICR program, the HEA’s time limit in the ICR program is at least equally likely to refer to the maximum period that the borrower can repay before the full loan amount must be repaid, or the borrower must default…Plaintiff’s Alternative Reading – Language in § 1087e(d)(1)(D) Does Not Allow Loans
Forgiveness under the ICR Program – Support is found elsewhere in the HEA that explicitly allows for loan forgiveness. Congress has clarified the circumstances under which loan forgiveness is allowed, and the ICR program is not one of those circumstances.
In a subsequent opinion, Judge Ross concluded that a loan forgiveness program of this magnitude clearly qualified as a “significant problem,” but also showed that even setting aside the substantial problem doctrine, the program was illegal. This doctrine only further strengthens the arguments stated by the plaintiff:
Here, the Secretary’s final rule addresses a broad range of issues for which there is no real controversy.
economic and political significance, and therefore may involve significant issue-ism. But to the extent that it is necessary to invoke the material issues principle at this stage of litigation, it only confirms the conclusions reached by the court using typical statutory interpretation tools.
The court did reject some of the other arguments raised by the plaintiffs and will also leave in place portions of the SAVE program that do not actually forgive debt, but merely change payment schedules, etc. Nonetheless, Judge Ross’s reasoning suggested that the plan’s most important provision—the provision that forgives large amounts of student loan debt—is illegal because it was not authorized by Congress.
exist Alaska v. Department of Education (original name Kansas v. Biden) Kansas District Judge Daniel Crabtree made a similar decision. The standing issue in this case had been addressed in a previous decision, with Justice Crabtree concluding that only three of the 11 plaintiff states had standing authority. Unlike Judge Ross, he held that granting qualification to one state did not resolve the qualification problem in other states. Kansas, which initially led the lawsuit, was one of the states that did not gain standing and has since been renamed.
On the merits, Crabtree J’s reasoning was very similar to Ross J’s, except that he relied more heavily on the principle of main issues:
In order to resolve the plaintiff’s motion, the court must answer three questions.
first: Whether the defendants’ SAVE plan raises “significant issues” – one of which is economic
Defendants must prove that Congress explicitly authorized the political significance of the SAVE program? exist Biden v. Nebraska, 143 S.Ct. 2355 (2023), the Supreme Court answered this question. This recent binding ruling from the Supreme Court held that “the fundamental and consequential trade-offs inherent in a massive debt cancellation program are ones that Congress may have intended for itself.” ID. 2375 (offer cleared). So, it’s a simple “yes”.secondConsidering that there are major issues in this case, has the defendant shown
Does the Higher Education Act explicitly authorize their SAVE program? Biden v. Nebraska This question is not answered because the case involves different regulations with different regulatory histories. Although this is a close and difficult question, the court’s answer to the second question is “no.” Defendants offered colorful and plausible explanations of the Higher Education Act that could authorize the SAVE program, but these explanations were insufficient Clear Authorized by Congress.Last, the court must decide whether the preliminary injunction should apply nationwide. Scope aside, the portion of the injunction sought by the plaintiffs was unworkable and therefore denied by the court. But the court reluctantly answered “yes” to the workable portion of the plaintiffs’ injunction—it should apply nationwide.
I think Ross J’s analysis is better than Crabtree J’s and the case can be resolved even if the material issues doctrine does not apply. But if the statute is indeed unclear, the two judges were right to conclude that the MQD needed to rule in favor of the plaintiff.
Despite some differences, both courts have issued preliminary injunctions across the country, blocking further government loan relief. The nationwide ban is the subject of widespread controversy. I think both courts were right to issue a nationwide injunction here because, as Crabtree J said, “[a] Given the urgent need to harmonize the administration of student loan programs across the country, broad rules like the SAVE program require broad bans.
Today’s two rulings deal only with preliminary injunctions. No final decision has been made on the merits of the case. However, both judges made clear that they believed the plaintiffs were likely to prevail on the key issues in any such final ruling (such likelihood of success is one of the criteria for obtaining a preliminary injunction).
The Biden administration is certain to appeal both rulings. But the fact that they lost at the trial court level in both cases despite bringing the case before Lib Dem appointees is a strong indication they will face an uphill battle. I am more confident now than before that the most likely outcome of this lawsuit is that the SAVE program will suffer the same fate as its predecessor, the HEROES Act.
I believe the Supreme Court’s decision is correct Biden v. Nebraska, I think today’s decision against the SAVE plan is the right one. Allowing the executive branch to search the treasury and use money for purposes not authorized by Congress is dangerous. By the same token, I also oppose Donald Trump’s attempts to divert military funds to build a border wall, which has much in common with Biden’s student loan shenanigans.
