Judge dismisses GOP states’ lawsuit challenging Biden’s student debt relief
The decision came hours after Supreme Court Justice Amy Coney Barrett denied an emergency request to halt the debt relief plan in a separate lawsuit brought by a conservative group in Wisconsin.
The early court victories for Biden’s debt relief policy come as millions of Americans flood the Education Department with applications to participate in the policy. Department officials have said in court filings that they will not discharge any debt before this coming Sunday.
Several other lawsuits remain pending in various courts across the country.
The legal challenge brought by six Republican states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — is likely to be appealed. It is widely seen by proponents and critics of the debt relief plan as among the most serious and credible challenges.
The GOP state attorneys general had argued that Biden’s student loan policy was illegal, unconstitutional and should be stopped.
They argued that the Biden administration’s actions would cause them economic injury because of lost tax revenue as well as other losses stemming from federal student loans that state-related entities manage, own or invest in. But Judge Autrey ruled on Thursday that many of those harms were “merely speculative” or at least not imminent.
In addition, he rejected Missouri’s argument that it could claim any losses suffered by a quasi-state entity — the Missouri Higher Education Loan Authority, known as MOHELA — as its own.
MOHELA, which owns and services federal student loans, was not a named plaintiff in the lawsuit. And Autrey wrote that the organization’s finances were too removed from the state of Missouri for officials to be able to pursue the lawsuit on behalf of MOHELA.
The decision was, in part, a vindication of the Biden administration’s legal strategy to suddenly curtail its debt relief program without warning in September, which drew the ire of many borrowers and some progressives.
In a reversal, the Education Department announced Sept. 29 that it would no longer allow borrowers with federal loans held by private entities to convert their loans in a way that qualifies them for the relief program.
Several of the GOP-led states had argued that forgiving those privately-held federal student loans would harm state-related organizations that own or invest in them.
But Autrey ruled on Thursday that the policy change had eliminated an “ongoing injury” to two of the states, Arkansas and Nebraska, meaning they no longer have standing to challenge the entire policy.