Biden’s plan met its first substantive hurdle Friday night, when the United States Court of Appeals for the 8th Circuit granted an administrative reprieve for one of the lawsuits filed by six Republican-led states. The administrative stay is not a decision on the merits of the case, but rather a temporary pause until the court decides whether or not to grant an injunction.
Until Friday, it had appeared that the Biden administration was staying away from legal challenges targeted by Republicans against its debt relief plan. A U.S. District Judge had on Thursday dismissed the States lawsuit for lack of standing, the same day Supreme Court Justice Amy Coney Barrett denied a separate trial by a conservative legal institute on behalf of a taxpayer association, which argued that Biden does not have the power to waive debt so broadly and that debt relief was unconstitutional.
The group, Wisconsin Institute for Law and Liberty, had previously argued in a lawsuit filed in the U.S. District Court for the Eastern District of Wisconsin that the loan forgiveness was unconstitutional, in part because its goals of reducing the racial wealth gap amounted to an “inappropriate racial ground.
However, the group dropped the race-related part of its argument in its Supreme Court petition. District Judge William C. Griesbach dismissed the lawsuit for lack of standing.
The six Republican-led states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina – argued that debt relief would lead to lower revenue from loans that were due to be forgiven. Judge Henry E. Autrey of the U.S. District Court for the Eastern District of Missouri wrote in his order that concerns about the loss of tax revenue were “merely speculative”.
In a editorial published in USA Today on Saturday, Cardona took issue with the Republicans’ argument, saying they did not dispute the billions of dollars in pandemic relief for business owners in their states, with tax cuts for high income or with loan forgiveness who helped Republican Members of Congress. “It’s only when relief goes to American workers and middle classes that these elected officials have a problem,” he wrote.
Despite the lawsuits, Cardona has encouraged eligible borrowers to apply for relief as the Department of Education moves “at full speed in preparations for the legal implementation of our program so that we can provide relief to borrowers who need it most,” he wrote.
In August, Biden announced his intention to forgive up to $10,000 in federal student debt for those earning up to $125,000 or up to $250,000 for married couples. Pell Grant recipients are eligible for an additional $10,000. Requests for relief are open until the end of next year, although the administration has encouraged borrowers to apply earlier in the hope cancellations could hit accounts before a break expires on student loan repayments on December 31.
University of Alabama law professor Luke Herrine, who has argued the president has the power to write off student debt on a large scale, said debt relief could still come soon despite the federal appeals court hurdle. Herrine said that while the appeals court’s decision was uncertain, “I would expect her to affirm the district court’s decision” against the Republicans’ lawsuit.
He said he expected a decision from the appeals court “at least within a few weeks” given that the suspension was “an urgent request”.
Borrowers seeking relief should still apply despite the legal noise, he said. “If you get your app now, you’re more likely to get relief,” Herrine said. “There is no harm in applying,” he added.
Danielle Douglas-Gabriel and Kelly Kasulis Cho contributed to this report.
This story has been updated to reflect that the lawsuit filed in U.S. District Court by the Wisconsin Institute for Law and Liberty included arguments that President Biden’s debt relief package had a “motive racially inappropriate,” but that the group deleted that part of its argument in its Supreme Court petition.