Republicans in six states are seeking an injunction to prevent the Biden administration from proceeding. Attorneys for the Biden administration and the states opposing the president’s plan to cancel student loans faced off in a federal court hearing on Wednesday, leaving the initiative’s future uncertain.
The roughly two-hour hearing in a federal court in Missouri was part of a case brought by Republican-elected leaders in six states — Missouri, Nebraska, Arkansas, South Carolina, Kansas, and Iowa. They are attempting to halt the administration’s plan to forgive hundreds of billions of dollars in student debt. These states want a preliminary injunction that would prevent the administration from proceeding.
James Campbell, solicitor general of Nebraska, argued on behalf of the state plaintiffs that Congress never granted the U.S. Department of Education so broad authority to forgive so much debt. He also claimed that the Biden administration forgave loans without consideration of financial need. Mr. Campbell stated this is a tremendous exercise of federal agency power. He added that they are attempting to circumvent Congress, which they cannot do.
A lawyer for the Biden administration, Brian Netter, justified the debt relief and income-eligibility requirements as a legitimate attempt to help borrowers emerging from the pandemic weeks before a student-loan payment freeze that began in March 2020 is slated to expire.
Mr. Netter stated that a program of forgiveness that was more focused and less costly was not practicable or necessary. He stated a case-by-case review is unnecessary. Several pending lawsuits dispute the validity of Mr. Biden’s student loan canceling scheme, including this one.
The Biden administration would forgive up to $20,000 in school debt for borrowers earning less than $125,000 annually or $250,000 for married couples. The proposal, which the president revealed in August, will be implemented before the midterm elections.
President George W. Bush’s appointment, U.S. District Judge Henry E. Autrey, did not decide on the state’s request for an injunction on Wednesday but indicated the parties would hear from him shortly.
The case hinges on whether the administration’s strategy is constitutional and permissible under a 2003 legislation that enables the Education Department to suspend or amend federal student-loan rules during war or a national emergency.
Judge Autrey did not indicate which party had the stronger position, but he pressed Mr. Netter for clarification on what constitutes a national emergency and the timing of the program. He also inquired whether the Biden administration considered options for mass loan forgiveness.
Wednesday’s court also examined whether the state plaintiffs had satisfied the prerequisites for their case to be heard. A crucial preliminary concern is whether the loan cancellation poses any impending financial risks to the states.
The states assert that the scheme will deplete tax revenues and hurt state-established institutions that make money from student loan servicing.
The Biden administration asserts that the states’ allegations of financial harm are too speculative and weakened by the government’s recent eligibility modifications.