On Tuesday, a federal appeals court dealt a significant setback to the student debt cancellation program, initially valued at over $475 billion, that was launched by former President Joe Biden. The court issued an order blocking the regulation in its entirety.
Last year, the Eighth US Circuit Court of Appeals had already partially halted the loan forgiveness program, but a three-judge panel in St. Louis issued a final ruling, preventing any part of the initiative from moving forward.
Judge L. Steven Grasz authored a 25-page opinion stating that Education Secretary Miguel Cardona exceeded his constitutional powers in implementing the Saving on a Valuable Education (SAVE) plan.
“Rather than implying by omission or other ambiguities, Congress has spoken clearly when creating a repayment plan with loan forgiveness or otherwise authorizing it — explicitly stating the Secretary should cancel, discharge, repay, or assume the remaining unpaid balance,” Grasz explained, pointing out that the SAVE Plan lacked similar language.
In 2023, the Penn Wharton Budget Model estimated that the so-called “repayment plan,” which Grasz argued permitted debt to be “largely forgiven rather than repaid,” would cost taxpayers $475 billion over the coming decade.
Republican state attorneys general from Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma filed the lawsuit against Biden and Cardona. They appealed after winning a partial injunction at the district court level.
At that point, the program had already disbursed $1.2 billion to student borrowers, with the initiative having begun in February 2024. Roughly 7.5 million Americans had applied for the debt relief.
“We obtained another court order BLOCKING an illegal Biden-era student loan scheme,” Missouri Attorney General Andrew Bailey declared on X. “Though @JoeBiden is out of office, this precedent is imperative to ensuring a President cannot force working Americans to foot the bill for someone else’s Ivy League debt.”
The Biden administration had canceled approximately $183.6 billion in student loan debt.
Republicans in Congress accused Biden of using the debt forgiveness program to “buy votes” ahead of the 2024 election — one such program, which was estimated to cost $430 billion, was declared unconstitutional by the Supreme Court in June 2023.
“He isn’t ‘forgiving’ debt. He is taking the debt from those who willingly took it out to go to college and transferring it onto taxpayers who decided not to go to college or already paid off their loans,” Sen. Bill Cassidy (R-La.) said in a statement last year.
“This is an abuse of power before an election in an attempt to buy votes at the expense of American taxpayers,” Cassidy, who now chairs the Senate Health, Education, Labor, and Pensions (HELP) Committee, added.
The SAVE plan aimed to reduce monthly loan payments by half for many borrowers and eliminate payments entirely for those earning minimum wage.
It also proposed to forgive remaining debts for those who owe $12,000 or less after making 10 years of payments.
Bailey and other state attorneys general had previously succeeded in halting another round of $147 billion in student loan forgiveness just weeks before the election.
The Biden administration justified its authority to cancel federally held loans by citing older statutes, including a 2003 law that was originally intended to assist veterans of the Iraq and Afghanistan wars, which the administration broadly interpreted to include individuals facing financial hardship during the COVID-19 pandemic.
In the majority opinion that struck down the first $430 billion debt forgiveness effort, Supreme Court Chief Justice John Roberts remarked that an education secretary “has never previously claimed powers of this magnitude.”
Grasz echoed this sentiment in his ruling on the $475 billion forgiveness initiative.
“As with the previous attempt at loan forgiveness, the major questions doctrine informs our analysis,” Grasz noted. “We assume Congress would have provided clear signs if it authorized such significant power to the Secretary. It did not.”
The SAVE case was heard by Grasz, who was appointed by President Trump during his first term, along with Judge Ralph Erickson, another Trump appointee, and Judge Raymond Gruender, who was appointed by former President George W. Bush.
It remains uncertain whether the current administration, under Education Secretary Denise Carter, will withdraw the plan, with Biden and Cardona now replaced as defendants.
Trump, who is 78 years old, has expressed a desire to dissolve the Department of Education entirely and transfer its responsibilities to individual states under the leadership of Education Secretary-designate Linda McMahon.
{Matzav.com}