Earlier this week, the Eighth Circuit became the latest court to strike down the Biden Administration's student loan forgiveness plan. The Wall Street Journal Editorial Board explained:
The appellate court’s unsigned opinion focuses on the threshold question of whether Missouri suffered a concrete and particular injury to sue. Missouri argued that the loan cancellation would cost its student loan servicer, Missouri Higher Education Loan Authority (Mohela), revenue and impose administrative burdens.
Missouri lawmakers established Mohela as a “public instrumentality” in 1981 in part to provide financial aid to students. A lower-court judge, however, ruled that lawmakers intended Mohela to be a “self-sustaining and financially independent agency.” Ergo, Missouri couldn’t sue since the state wasn’t directly harmed by the loan write-off.
The Eighth Circuit disagreed, noting that state law specifically directs Mohela to distribute $350 million into a state fund for capital projects at public colleges, among other things. Mohela still owes $105 million. The Administration’s loan write-off could impair its obligation and threaten financial harm to the state.
After granting Missouri legal standing, the court explained that the equities “strongly favor an injunction” since the debt cancellation would have an irreversible impact on the state while an injunction wouldn’t currently harm borrowers. That’s ironically because the Administration extended its student loan payment pause through December.
Despite the program being clearly unconstitutional, Democrats used the loan forgiveness plan as a major part of their platform during the midterms:
Biden’s unilaterally decreed program is blatantly lawless (though it no doubt helped buy Democrats the loyalty of young voters in time for the midterms). Realizing this, the administration has spent more of its energy making the gambit difficult to challenge legally than in trying to justify it on the merits.
As a result of the Eighth Circuit's ruling, sources from inside the White House are saying that the loan repayment moratorium may be extended:
The moratorium is not expected to be indefinitely extended during Biden’s tenure, the people said, but extending it at least temporarily would provide some relief to borrowers. It is unclear if the president has signed off on the idea or been involved in the planning, though senior aides have discussed the move.
“As the legal vulnerability has become clearer and clearer, the White House has been making increasingly firm plans to extend the loan repayment pause,” one of the people familiar with the matter said. “The extension we’re likely to see is meant to make sure borrowers don’t have the rug pulled out from under them, rather than an indefinite replacement for loan forgiveness.”
Congratulations to Missouri Attorney General Eric Schmitt for your win against the Biden Administration in Court! We look forward to you joining the U.S. Senate in January.