Biden's student loan forgiveness plan survives two legal challenges

[October 21, 2022]  By Andrew Chung and Nate Raymond

(Reuters) -A federal judge on Thursday dismissed a Republican-led challenge to President Joe Biden's plan to cancel billions of dollars in student debt, shortly after U.S. Supreme Court Justice Amy Coney Barrett rejected a request in another case to block it.

U.S. District Judge Henry Autrey in St. Louis, Missouri, said that while the six Republican-led states had raised "important and significant challenges to the debt relief plan," they lacked the necessary legal standing to be able to pursue the case.

Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina had alleged Biden's plan skirted congressional authority and threatened the states' future tax revenues and money earned by state entities that invest in or service loans.

Their case is one of a number of challenges that conservative state attorneys general and legal groups have filed seeking to put on hold the debt forgiveness plan for people who had taken out loans to pay for college announced by Biden in August.

Autrey ruled about an hour after Barrett denied without explanation an emergency request to put the debt relief plan on hold in the challenge brought by the Wisconsin-based Brown County Taxpayers Association.
 

A lower court had thrown out the Wisconsin group's lawsuit because it could not show that it was personally harmed by the loan relief. Barrett is designated by the Supreme Court to act on emergency matters arising from a group of states, including Wisconsin.

Republican state attorneys general promised to appeal Autrey's decision. Nebraska Attorney General Doug Peterson in a statement said "the states continue to believe that they do in fact have standing to raise their important legal challenges."

In a policy benefiting millions of Americans, Biden said in August the U.S. government will forgive up to $10,000 in student loan debt for borrowers making less than $125,000 a year, or $250,000 for married couples. Students who received Pell Grants to benefit lower-income college students will have up to $20,000 of their debt canceled.

The policy fulfilled a promise that Biden made during the 2020 presidential campaign to help debt-saddled former college students. The Congressional Budget Office in September calculated that the debt forgiveness would cost the government about $400 billion.

U.S. President Joe Biden delivers remarks about the student loan forgiveness program from an auditorium on the White House campus in Washington, U.S., October 17, 2022. REUTERS/Leah Millis

Democrats are hoping the policy will boost support for them in the Nov. 8 midterm elections in which control of Congress is at stake even as many Republicans criticize the plan.

Top Senate Republican Mitch McConnell called the debt forgiveness "socialism" that will worsen inflation, reward "far-left activists" and deliver a "slap in the face" to Americans who paid back their student loans or picked career paths including serving in the military to avoid taking on debt.

Several legal challenges have been filed contesting Biden's authority to cancel the debt under a 2003 law called the Higher Education Relief Opportunities for Students Act, which lets the government modify or waive federal student loans during war or national emergency.

Biden's administration asserts that the COVID-19 pandemic represented such an emergency.

The six states sued on Sept. 29. That same day, the U.S. Department of Education closed the forgiveness program to borrowers with loans issued by private banks but guaranteed by the federal government, a move seen as an attempt to avoid lawsuits involving state entities that profit from such loans.

In a 19-page ruling, Autrey cited that decision in dismissing the states' cases. He said claims by several of the states that their tax revenues would be also harmed were "tenuous" and "speculative."

The Wisconsin group brought its case to the Supreme Court after rapid losses in lower courts. It sued on Oct. 4, arguing that the policy "obligates federal taxes and erases federal assets (in the form of debt) without any authority whatsoever."

U.S. District Judge William Griesbach in Green Bay threw out the case two days later, noting that merely paying taxes is not enough to challenge federal actions. The Chicago-based 7th U.S. Circuit Court of Appeals subsequently refused the group's request to block the debt relief program pending an appeal.

(Reporting by Andrew Chung in New York and Nate Raymond in Boston; Editing by Will Dunham, Aurora Ellis and Richard Pullin)

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