Student Borrower Protection Center Leadership Praise Ruling Dismissing Right-Wing Scheme to Block Debt Relief for 40 Million Americans
October 20, 2022 | WASHINGTON, D.C. — Moments ago, the judge in State of Nebraska et. al. v Biden dismissed a lawsuit by six Republican-led states to block President Biden’s plan to cancel up to $20,000 in student debt for tens of millions of federal student loan borrowers.
These states sought a preliminary injunction, arguing that debt cancellation must be stopped because the profits of lenders and servicers, like student loan giant Missouri Higher Education Loan Authority (MOHELA), were threatened by the Administration’s efforts to ensure the financial well-being of Americans saddled with student loan debt during a national emergency. Over 12 million borrowers have already applied to receive loan cancellation.
“Today, a federal judge confirmed what lawyers in and out of government have long known: Joe Biden can cancel student debt broadly and immediately,” said Student Borrower Protection Center (SBPC) executive director Mike Pierce. “As right-wing politicians and corrupt corporations fight against this historic effort to deliver life-changing debt relief to tens of millions of families, borrowers have their clearest sign yet that the law is on their side.”
“With today’s decision, millions of student loan borrowers are one step closer to getting the student loan relief they desperately need and that President Biden has promised to deliver,” said SBPC deputy executive director and managing counsel Persis Yu. “This politically and profit-motivated effort to halt President Biden’s historic plan to deliver vital relief has failed, preserving debt relief for working and middle-class families as they recover from the pandemic. The Administration must move fast to ensure that all eligible borrowers are able to access this relief and benefit from this life-changing policy. As this federal judge signaled, the law will not be manipulated to prioritize the interests of political leaders and lenders desperate to make a buck off of the backs of struggling borrowers.”
Background on Nebraska, Missouri et. al. v Biden
On September 29, 2022, Missouri Attorney General Eric Schmitt, joined by Republican attorneys general in Kansas, Nebraska, South Carolina, and Arkansas, along with the Solicitor General of Iowa, filed a lawsuit in federal court in the Eastern District of Missouri seeking to block President Biden’s effort to cancel up to $20,000 in student debt for 40 million Americans. This lawsuit alleges that the State of Missouri, speaking on behalf of MOHELA, is suffering ongoing, irreparable harm due to increased “compliance costs” to the state-backed student loan company and the prospect of “imminent loss of revenue” should fewer Americans owe student loans. In effect, a state-backed student loan company hired to act as a federal contractor is asserting it has standing to veto federal student loan policy nationwide in order to protect its profits.
On Wednesday, October 12, 2022, a federal judge heard oral arguments to consider whether to grant MOHELA’s motion to block student debt relief for tens of millions of people. In its decision on October 20, 2022, the court held that the Plaintiff States failed to establish Article III standing—cancelling student debt did not harm the states seeking to block this effort—and, therefore, the Court lacks jurisdiction to hear this case.
A copy of the complaint in Nebraska, et. al. v. Biden is available here: https://storage.courtlistener.com/recap/gov.uscourts.moed.198213/gov.uscourts.moed.198213.1.0_1.pdf
A copy of the reply brief filed by the U.S. Department of Justice is available here: https://storage.courtlistener.com/recap/gov.uscourts.moed.198213/gov.uscourts.moed.198213.27.0.pdf
Recorded arguments in Nebraska, et. al. v. Biden from October 12th, available here: https://www.youtube.com/channel/UCIWD5tA9DvZskM37uuuPBMg/
Order dismissing Nebraska et. al. v. Biden: https://storage.courtlistener.com/recap/gov.uscourts.moed.198213/gov.uscourts.moed.198213.46.0.pdf
Background on President Biden’s Cancellation Plan
On August 24, 2022, the White House and Department of Education announced a Student Debt Relief Plan to provide up to $20,000 of debt relief to borrowers making under $125,000 pursuant to its authority under the Higher Education Act of 1965 (HEA), as modified by the Higher Education Relief Opportunities for Students Act of 2003 (HEROES) Act. The Biden-Harris Administration estimates that “over 40 million borrowers are eligible for its student debt relief plan, and nearly 20 million borrowers could see their entire remaining balance discharged. Nearly 90% of relief dollars will go to those earning less than $75,000 per year.”
In particular, the Department announced that it would offer a one-time option for borrowers to receive $10,000 in federal student loan debt relief or $20,000 for borrowers who received a Pell Grant for their undergraduate education. Some borrowers, such as those who have filed 2020-2021 tax data with the Department, will be able to receive cancellation automatically. Borrowers can opt out of this forgiveness if they so choose. All other borrowers will have to apply with the Department to receive cancellation.
Further Reading
Cease and desist letter from American Federation of Teachers, AFL-CIO, and SBPC alleging MOHELA engaged in unlawful loan servicing practices and must end its scheme to block student debt relief: Missouri-Based Student Loan Giant Accused of Illegal Loan Servicing Practices, Scheme to Block Student Debt Relief for Millions of Borrowers
###
About Student Borrower Protection Center
The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.