Biden’s student loan forgiveness plan survives two legal challenges

Oct 20 (Reuters) – A federal judge on Thursday rejected 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 denied 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 substantial challenges to the debt relief plan,” they lacked the necessary legal standing to pursue the case.

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

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Their case is one of a number of challenges that conservative attorneys general and legal groups have filed to delay 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 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 waiver. Barrett is appointed by the Supreme Court to act in emergency cases arising from a group of states, including Wisconsin.

Republican attorneys general vowed to appeal Autrey’s decision. Nebraska Attorney General Doug Peterson said in a statement that “the states continue to believe that they do indeed have standing to raise their important legal challenges.”

In a policy that benefits millions of Americans, Biden said in August that 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 Biden made during the 2020 presidential campaign to help debt-ridden former college students. The Congressional Budget Office in September calculated that the debt relief would cost the government about $400 billion.

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

Top Senate Republican Mitch McConnell called the debt relief “socialism” that will exacerbate inflation, reward “extremist left-wing activists” and provide a “slap in the face” to Americans who paid back their student loans or chose career paths including service in the military to avoid incur debt.

Several legal challenges have been filed challenging 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 times of war or national emergency.

Biden’s administration argues that the COVID-19 pandemic represented such an emergency.

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

In a 19-page decision, Autrey cited that decision in dismissing the states’ cases. He said claims by several of the states that their tax revenues would also be hurt were “weak” and “speculative.”

The Wisconsin group brought its case to the Supreme Court after swift losses in lower courts. It sued on Oct. 4, claiming the policy “obligates federal taxes and wipes out 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 simply paying taxes is not enough to challenge federal actions. The Chicago-based 7th US Circuit Court of Appeals subsequently denied the group’s request to block the debt relief program pending an appeal.

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

Our standards: Thomson Reuters Trust Principles.

Nate Raymond

Thomson Reuters

Nate Raymond reports on the federal judiciary and litigation. He can be reached at nate.raymond@thomsonreuters.com.

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