A second federal appeals court rejected the Biden administration’s bid to suspend a ruling that would block the president’s student debt relief policy.
The 5th US Circuit Court of Appeals ruled Wednesday night that it would not stay a ruling by a Texas judge that struck down the policy while an appeal of the decision played out.
The move sets the stage for the US Justice Department to take the case to the US Supreme Court, which is already considering a separate request by the Biden administration to overturn an order by the US 8th Circuit Court of Appeals block the loan forgiveness program.
A panel made up of George W. Bush appointees, Barack Obama appointees and Donald Trump appointees refused to deny the 5th Circuit.
They did not explain their reasoning for rejecting the administration’s request, but the panel ordered that the full appeal be considered on an expedited basis.
College alum tells CNN: The only way to open the door was to take on student loan debt
Nearly two weeks ago, the Biden administration began notifying people who have been approved for federal student loan relief, even as the future of that relief remains in limbo since lower courts blocked the program across the country. The emails from the US Department of Education to borrowers who acknowledged legal challenges recently put the administration on the hook for releasing the debt.
Biden’s program would have offered up to $20,000 in debt relief to millions of qualified borrowers, but has faced legal challenges.
A November 10 Texas ruling upheld by an appeals court on Wednesday declared Biden’s program illegal. This prompted the Department of Education to stop accepting applications for loan relief.
About 26 million people applied for student loan relief before the recent court decisions and 16 million of those applications were approved, according to the Biden administration.
Federal student loan payments that were suspended during the Covid-19 pandemic were set to resume in January. But the Biden administration extended the moratorium again on Nov. 22 as legal battles continue.
The payment freeze will last until 60 days after the litigation is resolved. If the program is not implemented and the litigation is not resolved by June 30, payments will resume 60 days later, according to the Department of Education.
“I am confident that my plan is legal,” said President Joe Biden in a video posted on Twitter last week, referring to his student loan forgiveness program.
“But it’s not fair to ask thousands of borrowers who are eligible for relief to resume their student debt payments while the courts are considering the law,” he said.
Economist offers “opposite” advice on student loans
The Biden administration argued that Congress granted the education secretary the power to widely discharge student loan debt in a 2003 law known as the HEROES Act, which was passed after the Sept. 11 terrorist attacks.
Government lawyers argue that the law allows the secretary to release debt in the event of a national emergency, including the Covid-19 pandemic.
But the Texas federal judge found that the law does not give the executive branch clear congressional authorization to create the student loan forgiveness program.
“The program is therefore an unconstitutional exercise of Congress’ legislative power and must be struck down,” wrote then-President Trump nominee Judge Mark Pittman.
“In this country, we are not ruled by an all-powerful executive with a pen and a phone,” he said.
A conservative group, the Job Creators Network Foundation, filed the lawsuit in Texas in October on behalf of two borrowers who did not qualify for debt relief.
One plaintiff did not qualify for the student loan forgiveness program because her loans are not held by the federal government and the other plaintiff is only eligible for $10,000 in debt relief because she did not receive a Pell grant.
They argued that they were unable to express their disagreement with the rules of the program because the administration did not go through a formal notice and comment rulemaking process under the Administrative Procedure Act.
“This ruling protects the rule of law that requires all Americans to be heard by the federal government,” Elaine Parker, president of the Job Creators Network Foundation, said in a statement after the Nov. 10 ruling.
The advocacy group was founded by Bernie Marcus, a major Trump donor and former CEO of Home Depot.
If Biden’s program is allowed to move forward, individual borrowers who earned less than $125,000 in 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years could have up to $10,000 of their federal student loan debt to be forgiven
If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 in debt forgiveness.
There are a variety of federal student loans and not all are eligible for relief. Federal Direct Loans, including subsidized loans, unsubsidized loans, PLUS parent loans and PLUS graduate loans, are eligible.
But federal student loans guaranteed by the government but held by private lenders are not eligible unless the borrower applied to consolidate those loans into a Direct Loan before September 29.
This story has been updated with additional background information.