The Biden administration on Friday set the stage for a possible final decision on its student loan forgiveness program by formally asking the Supreme Court to consider the matter.
The urgent appeal asks the Supreme Court to intervene in a multifaceted legal battle that has seen two federal courts stay the program.
The Biden administration is seeking an immediate restart of the program and the authority to begin forgiveness, beginning with the 16 million applicants the White House says have already been approved for at least some of the loan cancellations.
“The Eighth Circuit’s flawed injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the amount of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations,” Attorney General Elizabeth Prelogar wrote in the appeal.
Friday’s lawsuit responds to a recent injunction by the Court of Appeals for the 8th Circuit in a case brought by a group of conservative states. Officials in those states joined forces to argue that the Department of Education had overstepped their authority with the program. The case is just one of the myriad legal challenges the program has faced in recent months.
The filing lists President Biden and Secretary of Education Miguel Cardona as parties to the proceeding for the government, arguing that Congress “expressly authorized” Cardona to take the actions he took under a 2003 law called the HEROES Act.
A series of legal challenges
In August, the Biden administration announced its plan to forgive $10,000 in student debt for those earning less than $125,000 and an additional $10,000 for those who received Pell Grants, which announced Borrowers with extreme financial hardship leave. Biden’s opponents claim it’s too expensive, exceeds the president’s authority and doesn’t address the fundamental issues that make the college so expensive.
The program drew immediate legal challenges, and the key case currently comes from Missouri, where the US Court of Appeals for the Eighth Circuit recently ruled in favor of officials from Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. They argued the program threatened future state tax revenues. A lower court dismissed the lawsuit for lack of standing, but the higher court overturned that decision.
Now it is appearing before the country’s highest court.
One of the plaintiffs in that case — Nebraska Attorney General Doug Peterson — said recently that it was important to stop the program so that “the legal issues surrounding the president’s powers are analyzed by the court before debts of over $400 billion to be transferred to American taxpayers.”
Biden’s program was also halted in a separate case from Texas, in which a conservative advocacy group called the Job Creators Network Foundation, founded by Home Depot co-founder Bernie Marcus, filed a lawsuit. This lawsuit is on behalf of two plaintiffs who say the plan’s rules barred them and they never had an opportunity to comment on the plan.
A Decision on Whether “The President Has Exceeded His Authority”
Many pundits predict a Supreme Court hearing may not go in the government’s best interests, as it is an open question whether Biden and Cardona have exceeded their legal authority on the matter.
Financial aid expert Mark Kantrowitz bluntly said in a recent Yahoo Finance interview, “If it gets to the US Supreme Court, the Biden administration will lose.”
Marc Goldwein of the Federal Budget Committee added in a separate interview that “there’s a good chance courts will look into this and say the President has exceeded his powers — spending really is the authority of Congress.”
Faced with the possible legal ascent, the White House has attempted to sidestep the various legal challenges based on the standing issue, an argument it reiterated in Friday’s filing. However, it remains to be seen whether the Supreme Court will focus on that aspect of the case or the plan itself when it takes up the issue in the coming weeks.
For now, the new plea for forgiveness is on hold, and Biden and his team are reportedly considering extending the student loan repayment pause — the one on the 31st Way.
Ben Vershkul is the Washington correspondent for Yahoo Finance.
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