U.S. President Joe Biden speaks about student loan debt on the White House on Aug. 24, 2022 in Washington, DC.
Alex Wong | Getty
The Biden administration on Friday asked the Supreme Court to reinstate its federal student loan program after a federal appeals court issued a nationwide injunction against the plan.
The administration’s request, which was previewed in one other court filing Thursday, blasted the U.S. Court of Appeals for the eighth Circuit for blocking the debt relief plan. That injunction was issued earlier in response to a lawsuit by a gaggle of Republican-controlled states.
“The Eighth Circuit’s erroneous injunction leaves thousands and thousands of economically vulnerable borrowers in limbo, uncertain concerning the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations,” Solicitor General Elizabeth Prelogar wrote in Friday’s filing with the Supreme Court.
Prelogar also wrote that if the Supreme Court declines to vacate the injunction, it could consider the filing as a petition to the high court to listen to the Biden’s administration appeal of the choice by the lower court.
And if the Supreme Court accepts the administration’s appeal, if could “set this case for expedited briefing and argument this Term,” she wrote. Keeping President Joe Biden’s plan on hold while the appeal unfolds, Prelogar said, could keep borrowers in uncertainty about their debts until “sometime in 2024.”
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Monday’s injunction by the eighth Circuit panel of three judges in St. Louis was the most recent in a series of legal challenges to Biden’s plan to cancel as much as $20,000 in student debt for thousands and thousands of Americans.
The Biden administration stopped accepting applications for its relief earlier within the month after a federal district judge in Texas struck down its plan last week, calling it “unconstitutional.”
Within the case at issue within the eighth Circuit, one other federal judge rejected the challenge to the debt relief program brought by the six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina.
The judge ruled that while the states raised “vital and significant challenges to the debt relief plan,” they ultimately lacked legal standing to pursue the case.
Standing refers to the concept that an individual or entity will likely be affected by the motion they seek to challenge in court.
The GOP-led states appealed after their lawsuit was denied.
The appeals panel ruled Monday that Missouri had shown a possible injury from the administration’s program, mentioning that a serious loan servicer headquartered within the state, the Missouri Higher Education Loan Authority, or MOHELA, would lose revenue under the plan. Missouri’s state Treasury Department receives money from MOHELA.
Borrower defaults could rise amid ‘ongoing confusion’
A top official on the U.S. Department of Education recently warned that there might be a historic rise in student loan defaults if its forgiveness plan will not be allowed to undergo.
“These student loan borrowers had the reasonable expectation and belief that they’d not need to make additional payments on their federal student loans,” U.S. Department of Education Undersecretary James Kvaal wrote in a court filing. “This belief might stop them from making payments even when the Department is prevented from effectuating debt relief,” he wrote.
“Unless the Department is allowed to supply one-time student loan debt relief,” he went on, “we expect this group of borrowers to have higher loan default rates resulting from the continued confusion about what they owe.”