The Biden administration on Friday asked the Supreme Court to reinstate President Joe Biden’s student loan forgiveness plan, which has been blocked by a federal appeals court.
Solicitor General Elizabeth Prelogar in court papers urged the justices to lift an injunction imposed by the St. Louis-based 8th U.S. Circuit Court of Appeals on Monday. Separately, a federal judge in Texas in a different case has also blocked the plan.
The government has also asked the New Orleans-based 5th U.S. Circuit Court of Appeals to lift that injunction.
In the new filing, Prelogar said that the 8th Circuit’s decision “leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations.”
Various individuals and groups have challenged the proposal, with the case now at the Supreme Court involving claims brought by six states: Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina.
A federal judge had ruled that the states did not have legal standing, but the appeals court disagreed, focusing on a Missouri agency that services federal student loans. The state argues that the agency would lose revenue if loans are forgiven.
A major obstacle facing those challenging the program is that they have to show they have legal standing to sue by illustrating how they are harmed by the program.
Justice Amy Coney Barrett previously rejected two earlier challenges to the plan, both of which arose from cases in which lower courts said challengers didn’t have standing to bring their claims.
If the Supreme Court was to conclude that the states do have standing and then reach the legal question of whether Biden had the authority to forgive the loans, the administration is likely to face an uphill battle with the court’s conservative majority skeptical of broad assertions of federal power.
The court in January, for example, blocked Biden’s COVID-19 vaccine or test requirement for larger businesses.
The programme, which allows eligible borrowers to cancel up to $20,000 of debt, has been blocked since the appeals court issued a temporary hold last month.
The administration has since closed the application process. Under a different Covid-related presidential order, borrowers do not currently have to make payments.
The challengers argue that the administration’s plan — announced by Biden in August and originally set to take effect this fall — violates the Constitution and federal law, partly because it circumvents Congress, which they said has the power to create laws related to student loan forgiveness.
Biden’s student debt relief program would provide up to $10,000 in debt cancellation for borrowers earning less than $125,000 a year (or couples who file taxes jointly and earn less than $250,000 annually).
Pell Grant recipients, who comprise the majority of borrowers, would be eligible for an additional $10,000 in debt relief.
The overall programme is anticipated to help more than 40 million borrowers, the administration has said.
The nonpartisan Congressional Budget Office estimated in September that Biden’s plan would cost $400 billion, while the Education Department said the price tag would be closer to $379 billion. (NBC)