As discussed here, last month, the Eighth Circuit granted an emergency motion by Republican officials in six states to temporarily pause the Biden administration’s student loan forgiveness program while they appeal the dismissal of their challenge by a Missouri federal judge, who found that they do not have standing to sue. On November 18, the Biden administration responded by filing an application to vacate the injunction with the Supreme Court, requesting that the Court either vacate the injunction, or, in the alternative, to construe the application as a petition for writ of certiorari before judgment, grant the petition, and set the case for an expedited briefing and argument still this term. The administration supported its request for expedited relief by arguing: “The Eighth Circuit’s erroneous injunction 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.”

Background

The states of Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina sued the President, Secretary of Education (Secretary), and Department of Education (Department) in the District Court for the Eastern District of Missouri alleging that the student loan forgiveness plan exceeds the Secretary’s authority and is arbitrary and capricious. On October 20, 2022, the district court dismissed the suit for lack of Article III standing. Specifically, the court rejected Missouri’s argument that it had standing because the Missouri Higher Education Loan Authority (MOHELA), a non-profit entity that services federal loans, would suffer financial harm because of the plan. The court found that MOHELA retains financial independence from the state and, thus, Missouri lacks the capacity to sue based on any harms to MOHELA. The next day, the Eighth Circuit entered an “administrative stay prohibiting the [Department] from discharging any student loan debt under the [c]ancellation program.”

Three weeks later, the Eighth Circuit granted the states a nationwide injunction pending appeal.

Highlights From The Application

In its application, the administration argues the injunction is inappropriate because the administration is likely to succeed on the merits, specifically, arguing that the respondent states lack standing. “Here, Missouri has chosen to structure MOHELA as a legal person that is distinct from the [s]tate — specifically, as a corporation with the capacity to ‘sue and be sued’ in its own name. … Even if alleged financial harm to MOHELA would establish standing for MOHELA, therefore, it would not establish standing for the State of Missouri.”

To the extent the Court considers the merits, the administration argues the entire purpose of the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) is to authorize the Secretary to grant student-loan-related relief to at-risk borrowers because of a national emergency, which is precisely what the Secretary did. “The Secretary reasonably ‘deem[ed]’ relief ‘necessary to ensure’ that a subset of those affected individuals — namely, those with lower incomes — ‘are not placed in a worse position’ in relation to their student-loan obligations ‘because of their status as affected individuals,’ i.e., because of the effects of the COVID-19 pandemic.” The administration further argues, the Secretary’s action was not arbitrary or capricious, but instead based on past experience with student loan borrowers transitioning back into repayment after emergency-related forbearance. “The Secretary found that, when loan-repayment obligations resume, many lower-income borrowers ‘will be at a heightened risk of loan delinquency and default’ due to the pandemic’s effects.”

The Biden administration further argues the Eighth Circuit’s nationwide relief is overbroad. While the Eighth Circuit claimed it granted universal relief because it could “discern no workable path” to crafting a narrower remedy that would provide complete relief, the administration argues such a path was obvious. The court of appeals could have simply enjoined the Secretary from discharging loans that are serviced by MOHELA. While this relief would not address the remaining states, the administration argues that would not be an issue because the Eighth Circuit did not find that any remaining states had standing or faced irreparable harm because of the plan.

Requested Relief

The administration concluded by requesting the Court vacate, or at a minimum narrow, the injunction pending appeal. In the alternate, the administration invited the Court to construe the application as a petition for writ of certiorari before judgment, and set the case for expedited briefing and argument this term on the following questions: (1) whether respondent states have Article III standing; and (2) whether the student loan forgiveness plan exceeds the Secretary’s authority or is arbitrary or capricious.

Going Forward

The student loan forgiveness plan is indefinitely on hold as the administration awaits the Supreme Court’s ruling on its application as well as the Fifth Circuit’s ruling on its appeal of a Texas federal court’s decision finding the plan to be unconstitutional.