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 to the student loan program during emergencies, such as the pandemic. Both the Trump and Biden administrations have invoked the law to suspend loan repayments.
“Congress has expressly deemed that student loan relief for borrowers involving national emergencies would be necessary, and Congress has specifically authorized the secretary to grant such relief without delay,” Prelogar wrote in the petition administrative to court. “Here, the secretary determined that relief was necessary to ensure that borrowers do not default on their loans or become delinquent when payment obligations recur, with potentially irreversible consequences for their credit and financial.”
Read the administration’s filing with the Supreme Court
The 8th Circuit’s ruling came days after a federal judge in a separate lawsuit in Texas declared President Biden’s debt relief plan illegal, barring the Department of Education from accepting more applications and releasing any debt. Administration lawyers asked the US Court of Appeals for the 5th Circuit to halt the ruling in the Texas case, and for it to be quickly considered.
Prelogar told the Supreme Court that if it chooses not to lift the 8th Circuit injunction, it should take up the case soon and hear the merits of the legal arguments in February. While the court typically waits for the appeals process to unfold, it has chosen such a way to hear challenges to administration policies on immigration and vaccines. Hours after the filing of Prelogar on Friday, the judges asked the states to file a response by noon on Wednesday.
Biden can’t “illegally slap college loan debt on millions of hard-working, debt-free Americans!” Arkansas Attorney General Leslie Rutledge (R), one of the officials who filed the suit, wrote in his tweet Friday. “I’ve gone all the way to the Supreme Court before to win and I’ll do it again.”
Biden’s loan relief plan would cancel up to $10,000 in federal student debt for borrowers who earn up to $125,000 annually, or up to $250,000 for a married couple. Pell Grant recipients are eligible for an additional $10,000 in forgiveness. So far, more than 26 million people have applied for debt relief, and 16 million of those files have been reviewed, according to the education department.
The Justice Department released a 25-page memo in August after announcing the relief program says The program is authorized by the 2003 law, the Higher Education Relief Opportunities for Students Act (the HEROES Act). The act authorizes the secretary of education to “alleviate the hardship that may be experienced by borrowers of federal student loans as a result of national emergencies.” It was passed in response to the September 11, 2001, attacks, but has since been used in other times of emergency.
But Republican-led states and other opponents of the program argue that the scale of the loan cancellation, at a cost of about $300 billion over 10 years, requires more specific congressional authorization because of its economic and political significance.
Six states filed the lawsuit in September – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina – the president accuses the president of overstepping his authority and threatening the revenues of state entities that profit from federal student loans. At least seven suits have been filed to try to stop it.
The 8th Circuit found standing, at least for Missouri, to bring the challenge on behalf of the Missouri Higher Education Loan Authority, a quasi-state outfit that owns and services federal student loans. Lawmakers said MOHELA, which funds state scholarships, would lose revenue from servicing Direct Loans — those made and owned by the federal government — that are eliminated.
The states also claimed that MOHELA and state investment entities with debt from the defunct Federal Family Education Loan program could be financially hurt if borrowers consolidated their debt in the Direct Loan program to qualify for relief. The Biden administration said in late September that such consolidations would no longer be eligible for amnesty.
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The panel also said delaying the program was justified because of “major legal issues that remain to be resolved” and that it would be too late to resolve them if the program were to operate.
Prelogar told the Supreme Court that the relationship between MOHELA and the state was too tenuous to express a position. And she rejected the states’ insistence that the program went beyond what Congress has authorized.
The individual loan forgiveness program, she wrote, was more targeted than Trump and Biden’s previous approach, which simply suspended debt repayment for all who had federal student loans.
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After careful study, Prelogar wrote, the education secretary found that reducing the principal owed to the most vulnerable borrowers “would risk delinquency and default rates rising above pre-pandemic levels,” once the payments. “The secretary thus acted to ‘ensure’ a certain purpose of the Act: ‘that borrowers would not be in a worse financial position in relation to their loans.’
She rejected the states’ arguments that more specific congressional authorization was needed under the “great questions” doctrine, which the Supreme Court invoked last term to limit the EPA’s power to combat climate change.
“Since its enactment in 2003, the Department has repeatedly invoked the HEROES Act to provide class-wide relief to certain borrowers, and as of March 2020, the Trump and Biden Administrations have invoked the Act both on the Act to issue relief to all borrowers,” she wrote. . “Pandemic relief is estimated to have cost the government more than $100 billion.”
This is the case Biden v. State of Nebraska, et al.