Emergency Motion To Stop the Discharge of Student Debt Granted: State of Nebraska v Joseph Biden Jr.
Plaintiff States’ requested to preliminarily enjoin the United States Secretary of Education (“Secretary”) from implementing a plan to discharge student loan debt under the Higher Education Relief Opportunities for Students Act of 2003(“HEROES Act”). The States contend the student loan debt relief plan contravenes the separation of powers and violates the Administrative Procedure Act because it exceeds the Secretary’s authority and is arbitrary and capricious. The Eighth Circuit granted the Emergency Motion for Injunction Pending Appeal. The court concluded that at this stage of the litigation, an injunction limited to the plaintiff States, or even more broadly to student loans affecting the States, would be impractical and would fail to provide complete relief to the plaintiffs.
The Biden Student Dept Forgiveness Program has been criticized by many throughout the US, and is now temporarily blocked from implementation by the Courts. (https://www.cbsnews.com/news/biden-student-loan-forgiveness-plan-backlash-criticism/)
The major arguments against are:
Con 1. Student loan forgiveness is an abuse of the loan system;
Con 2. Student loan debt forgiveness would disproportionately help rich or more financially secure college graduates;
Con 3. Discharging student loan debt would only be a temporary bandage for the much larger problem of inflated college costs;
We await a decision on moving forward from the United States Supreme Court.
BIDEN ADMINISTRATION ASKS THE SUPREME COURT TO ALLOW STUDENT LOAN FORGIVENESS PROGRAM
NBC News, November 18, 2022, by Lawrence Hurley
WASHINGTON — The Biden administration on Friday asked the Supreme Court to reinstate President Joe Biden’s student loan forgiveness plan, which has been blocked by a federal appeals court.
Solicitor General Elizabeth Prelogar in court papers urged the justices to lift an injunction imposed by the St. Louis-based 8th U.S. Circuit Court of Appeals on Monday. Separately, a federal judge in Texas in a different case has also blocked the plan. The government has also asked the New Orleans-based 5th U.S. Circuit Court of Appeals to lift that injunction.
In the new filing, Prelogar said that the 8th Circuit's decision "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."
Various individuals and groups have challenged the proposal, with the case now at the Supreme Court involving claims brought by six states: Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina.
A federal judge had ruled that the states did not have legal standing, but the appeals court disagreed, focusing on a Missouri agency that services federal student loans. The state argues that the agency would lose revenue if loans are forgiven.
A major obstacle facing those challenging the program is that they have to show they have legal standing to sue by illustrating how they are harmed by the program.
Justice Amy Coney Barrett previously rejected two earlier challenges to the plan, both of which arose from cases in which lower courts said challengers didn’t have standing to bring their claims.
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State of Nebraska v. Joseph Biden, Jr.
Court: US Court of Appeals for the Eighth Circuit
Opinion Date: November 14, 2022
Judge: Per Curiam
Areas of Law: Civil Procedure, Consumer Law, Education Law, Government & Administrative Law
Plaintiff States’ requested to preliminarily enjoin the United States Secretary of Education (“Secretary”) from implementing a plan to discharge student loan debt under the Higher Education Relief Opportunities for Students Act of 2003(“HEROES Act”). The States contend the student loan debt relief plan contravenes the separation of powers and violates the Administrative Procedure Act because it exceeds the Secretary’s authority and is arbitrary and capricious. The district court denied the States’ motion for a preliminary injunction and dismissed the case for lack of jurisdiction after determining none of the States had standing to bring the lawsuit.
The Eighth Circuit granted the Emergency Motion for Injunction Pending Appeal. The court concluded that at this stage of the litigation, an injunction limited to the plaintiff States, or even more broadly to student loans affecting the States, would be impractical and would fail to provide complete relief to the plaintiffs. MOHELA (https://www.mohela.com/) is purportedly one of the largest nonprofit student loan secondary markets in America. It services accounts nationwide and had $168.1 billion in student loan assets serviced as of June 30, 2022. Here the Secretary’s universal suspension of both loan payments and interest on student loans weighs against delving into such uncertainty at this stage.
State of Nebraska v. Joseph Biden, Jr., No. 22-3179 (8th Cir. 2022)
Whatever the eventual outcome of this case, it will affect the finances of millions of Americans with student loan debt as well as those Americans who pay taxes to finance the government and indeed everyone who is affected by such far-reaching fiscal decisions. As such, we approach the motion before us with great care.
This case centers on the plaintiff States’ request to preliminarily enjoin the United States Secretary of Education (“Secretary”) from implementing a plan to discharge student loan debt under the Higher Education Relief Opportunities for Students Act of 2003, Pub. L. No. 108-76, 117 Stat. 904 (codified at 20 U.S.C. §§ 1098aa–1098ee) (“HEROES Act”). See Federal Student Aid Programs (Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program), 87 Fed. Reg. 61,512, 61,514 (Oct. 12, 2022) (to be codified at 34 C.F.R. pts. 674, 682, 685). The States contend the student loan debt relief plan contravenes the separation of powers and violates the Administrative Procedure Act because it exceeds the Secretary’s authority and is arbitrary and capricious.
The district court denied the States’ motion for a preliminary injunction and dismissed the case for lack of jurisdiction after determining none of the States had standing to bring the lawsuit. Key to the district court’s rationale was its conclusion that the State of Missouri could not rely on any harm the Missouri Higher Education Loan Authority (“MOHELA”) might suffer on account of the Secretary’s cancellation of debt. The States appealed and moved for a preliminary injunction pending appeal. We grant the motion for the following reasons.
“In ruling on a request for an injunction pending appeal, the court must engage in the same inquiry as when it reviews the grant or denial of a preliminary injunction.” Walker v. Lockhart, 678 F.2d 68, 70 (8th Cir. 1982). This inquiry includes “balancing the equities between the parties.” Id. We ask “whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined.” Glenwood Bridge, Inc. v. City of Minneapolis, 940 F.2d 367, 370 (8th Cir. 1991) (quoting Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc)). In circumstances “where the movant has raised a substantial question and the equities are otherwise strongly in his favor, the showing of success on the merits can be less.” Dataphase, 640 F.3d at 113; see also Fennell v. Butler, 570 F.2d 263, 264 (8th Cir. 1978) (“If the balance tips decidedly towards the plaintiffs and the plaintiffs have raised questions serious enough to require litigation, ordinarily the injunction should issue.”).
The district court’s analysis began and ended with standing. Standing is a threshold issue since it is essential to our jurisdiction. United States v. One Lincoln Navigator 1998, 328 F.3d 1011, 1013 (8th Cir. 2003). We begin by examining the standing of the State of Missouri and, like the district court, focus on MOHELA. MOHELA’s unique mix of legal attributes and authority have led to differing opinions as to whether it is an “arm of the state” of Missouri for purposes of being entitled to sovereign immunity. The core issue before this court, however, is whether the alleged harm from the Secretary’s debt discharge plan, considering the role of MOHELA, is sufficient to meet the requirements for Article III standing for Missouri.
The relationship between MOHELA and the State of Missouri is relevant to the standing analysis. MOHELA was created by the General Assembly of Missouri. See Mo. Rev. Stat. § 173.360. It is governed by a seven-member board composed of five members appointed by the Governor of Missouri, as well as the Missouri State Commissioner of Higher Education and a member of the Missouri State Coordinating Board of Higher Education. Id. After its creation, the Missouri General Assembly expanded MOHELA’s purpose to include “support[ing] the efforts of public colleges and universities to create and fund capital projects.” Id. Relatedly, the General Assembly established the Lewis and Clark Discovery Fund (“LCD Fund”) from which the General Assembly may annually appropriate moneys for certain purposes, including “funding of capital projects at public colleges and universities.” Id. § 173.392. Most significantly, Missouri law, id. § 173.385.2, specifically directs MOHELA to distribute $350 million “into a fund in the State Treasury” for this program. MOHELA FY 2022 Financial Statements, at 20, available at https://tinyurl.com/4chp295x. MOHELA has met part of its obligation to the State treasury, but the “remaining unfunded amount . . . was $105.1 million as of June 30, 2022.” Id.
Given this statutory framework, MOHELA may well be an arm of the State of Missouri under the reasoning of our precedent. See Pub. Sch. Ret. Sys. of Mo. v. St. Bank & Trust Co., 640 F.3d 821, 826–27, 833 (8th Cir. 2011) (applying the test to determine whether sovereign immunity applies and holding Missouri public school employment retirement systems were arms of the state). In fact, a number of district courts have concluded that MOHELA is an arm of the state. See, e.g., Good
v. U.S. Dep’t of Educ., No. 21-CV-2539-JAR-ADM, 2022 WL 2191758, at *4 (D.
Kan. June 16, 2022); Gowens v. Capella Univ., Inc., No. 4:19-CV-362-CLM, 2020 WL 10180669, at *4 (N.D. Ala. June 1, 2020); see also In re Stout, 231 B.R. 313, 316–17 (Bankr. W.D. Mo. 1999). But see Dykes v. Mo. Higher Educ. Loan Auth., No. 4:21-CV-00083-RWS, 2021 WL 3206691, at *4 (E.D. Mo. July 29, 2021);
Perkins v. Equifax Info. Servs., LLC, No. SA-19-CA-1281-FB (HJB), 2020 WL 13120600, at *5 (W.D. Tex. May 1, 2020).
But even if MOHELA is not an arm of the State of Missouri, the financial impact on MOHELA due to the Secretary’s debt discharge threatens to impact Missouri independently through the LCD Fund. It is alleged MOHELA obtains revenue from the accounts it services, and the total revenue MOHELA recovers will decrease if a substantial portion of its accounts are no longer active under the Secretary’s plan. This unanticipated financial downturn will prevent or delay Missouri from funding higher education at its public colleges and universities. After all, MOHELA contributes to the LCD Fund but has not yet met its statutory obligation.
Due to MOHELA’s financial obligations to the State treasury, the challenged student loan debt cancellation presents threatened financial harm to the State of Missouri. See Dep’t of Com. v. New York, 139 S. Ct. 2551, 2566 (2019); Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973, 983 (2017). Consequently, we conclude Missouri has shown a likely injury in fact that is concrete and particularized, and which is actual or imminent, traceable to the challenged action of the Secretary, and redressable by a favorable decision. Missouri, therefore, likely has legal standing to bring its claim. And since at least one party likely has standing, we need not address the standing of the other States. See Nat’l Wildlife Fed’n v. Agric. Stabilization & Conservation Serv., 955 F.2d 1199, 1203 (8th Cir. 1992). Likewise, we need not decide whether the Secretary’s standing argument as to harm alleged to Arkansas and Nebraska is actually better viewed as a mootness argument. See West Virginia v. EPA, 142 S. Ct. 2587, 2607 (2022) (discussing the importance of the distinction and the heavy burden of establishing mootness once a live case has allegedly become moot due to voluntary cessation of conduct).
Having addressed the threshold standing issue, we turn to the balancing of the equities and the probability of success on the merits. Not only do the “merits of the appeal before this court involve substantial questions of law which remain to be resolved,” Walker, 678 F.2d at 71, but the equities strongly favor an injunction considering the irreversible impact the Secretary’s debt forgiveness action would have as compared to the lack of harm an injunction would presently impose. Among the considerations is the fact that collection of student loan payments as well as accrual of interest on student loans have both been suspended. We conclude “the equities of this case require the court to intervene to preserve the status quo pending the outcome” of the States’ appeal, id., and that the States have satisfied the standard for injunctive relief pending review, see D.M. by Bao Xiong v. Minn. State High Sch. League, 917 F.3d 994, 999?1001 (8th Cir. 2019) (discussing the standard for preliminary injunctive relief).
Finally, we have carefully considered the Secretary’s request that we limit the scope of any temporary relief. “Crafting a preliminary injunction is an exercise of discretion and judgment, often dependent as much on the equities of a given case as the substance of the legal issues it presents.” Trump v. Int’l Refugee Assistance Project, 137 S. Ct. 2080, 2087 (2017) (per curiam). As the Supreme Court has explained, “one of the ‘principles of equity jurisprudence’ is that ‘the scope of injunctive relief is dictated by the extent of the violation established, not by the geographical extent of the plaintiff class.’” Rodgers v. Bryant, 942 F.3d 451, 458 (8th Cir. 2019) (quoting Califano v. Yamasaki, 442 U.S. 682, 702 (1979)). Part of our consideration is whether the injunctive relief is “no more burdensome to the defendant than necessary to provide complete relief to the plaintiffs,” Madsen v. Women’s Health Ctr., Inc., 512 U.S. 753, 765 (1994), and “workable,” North Carolina v. Covington, 137 S. Ct. 1624, 1625 (2017) (per curiam).
We conclude that, at this stage of the litigation, an injunction limited to the plaintiff States, or even more broadly to student loans affecting the States, would be impractical and would fail to provide complete relief to the plaintiffs. MOHELA is purportedly one of the largest nonprofit student loan secondary markets in America. It services accounts nationwide and had $168.1 billion in student loan assets serviced as of June 30, 2022. See Rodgers, 942 F.3d at 458. Given MOHELA’s national role in servicing accounts, we discern no workable path in this emergency posture for narrowing the scope of relief. And beyond Missouri, tailoring an injunction to address the alleged harms to the remaining States would entail delving into complex issues and contested facts that would make any limits uncertain in their application and effectiveness. Although such complexities may not counsel against limiting the scope of an injunction in other contexts, here the Secretary’s universal suspension of both loan payments and interest on student loans weighs against delving into such uncertainty at this stage.
We GRANT the Emergency Motion for Injunction Pending Appeal. The injunction will remain in effect until further order of this court or the Supreme Court of the United States.
Student Loan Debt Relief Is Blocked
Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders.
If you’ve already applied, we’ll hold your application. Subscribe and check back here for updates. We will post information as soon as further updates are available.
What the program means for you, and what comes next??
Get details about one-time student loan debt relief (https://studentaid.gov/manage-loans/forgiveness-cancellation/debt-relief-info)
President Biden, Vice President Harris, and the U.S. Department of Education have announced a three-part plan to help working and middle-class federal student loan borrowers transition back to regular payment as pandemic-related support expires. This plan includes loan forgiveness of up to $20,000. Many borrowers and families may be asking themselves “what do I have to do to claim this relief?” This page is a resource to answer those questions and more. There will be more details announced in the coming weeks. To be notified when the process has officially opened, sign up at the Department of Education subscription page. You’ll have until Dec. 31, 2023 to apply.
The Biden Administration’s Student Loan Debt Relief Plan
Part 1. Final extension of the student loan repayment pause
Due to the economic challenges created by the pandemic, the Biden-Harris Administration has extended the student loan repayment pause a number of times. Because of this, no one with a federally held loan has had to pay a single dollar in loan payments since President Biden took office.
To ensure a smooth transition to repayment and prevent unnecessary defaults, the Biden-Harris Administration will extend the pause a final time through December 31, 2022, with payments resuming in January 2023.?
Frequently Asked Questions
Do I need to do anything to extend my student loan pause through the end of the year??
No. The extended pause will occur automatically.
Part 2. Providing targeted debt relief to low- and middle-income families
To smooth the transition back to repayment and help borrowers at highest risk of delinquencies or default once payments resume, the U.S. Department of Education will provide up to $20,000 in debt relief to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt relief to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households. Get details about one-time student loan debt relief.
In addition, borrowers who are employed by non-profits, the military, or federal, state, Tribal, or local government may be eligible to have all of their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program. This is because of time-limited changes that waive certain eligibility criteria in the PSLF program. These temporary changes expire on October 31, 2022. For more information on eligibility and requirements, go to PSLF.gov.?
Frequently Asked Questions
How do I know if I am eligible for debt relief??
To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households).?
If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt relief.?
If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt relief.
What does the “up to” in “up to $20,000” or “up to $10,000” mean??
Your relief is capped at the amount of your outstanding debt.
For example: If you are eligible for $20,000 in debt relief, but have a balance of $15,000 remaining, you will only receive $15,000 in relief.??
What do I need to do in order to receive debt relief?
Nearly 8 million borrowers may be eligible to receive relief without applying—unless they choose to opt out—because relevant income data is already available to the U.S. Department of Education.???
For borrowers whose income data the U.S. Department of Education doesn’t have, the Administration will launch a simple application in October. Borrowers won’t need to upload any documentation or have an FSA ID to submit their application.
If you would like to be notified by the U.S. Department of Education when the application is open, please sign up at the Department of Education subscription page.
Most borrowers who apply can expect relief within six weeks.
We encourage everyone who is eligible to file the application, but there are 8 million people for whom we have data and who will get the relief without applying unless they choose to opt out.
Borrowers are advised to apply by mid-November in order to receive relief before the payment pause expires on December 31, 2022.
The Department of Education will continue to process applications as they are received, even after the pause expires on December 31, 2022.
What is the Public Service Loan Forgiveness Program?
The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on your federal student loans after 120 payments working full time for federal, state, Tribal, or local government; the military; or a qualifying non-profit.?
Temporary changes, ending on Oct. 31, 2022, provide flexibility that makes it easier than ever to receive forgiveness by allowing borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF.
Enrollments on or after Nov. 1, 2022 will not be eligible for this treatment. We encourage borrowers to sign up today. Visit PSLF.gov to learn more and apply.
Visit the one-time student loan debt relief page for more information.?
Part 3. Make the student loan system more manageable for current and future borrowers
Income-based repayment plans have long existed within the U.S. Department of Education. However, the Biden-Harris Administration is proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers.
The rule would:?
Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.
Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
Cover the borrower’s unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.?
The Biden-Harris Administration is working to quickly implement improvements to student loans. Check back to this page for updates on progress. If you’d like to be the first to know, sign up for email updates from the U.S. Department of Education.
Beware of Scams
You might be contacted by a company saying they will help you get loan discharge, forgiveness, cancellation, or debt relief for a fee. You never have to pay for help with your federal student aid. Make sure you work only with ED and our loan servicers, and never reveal your personal information or account password to anyone.
Our emails to borrowers come from email@example.com, firstname.lastname@example.org, and email@example.com. You can report scam attempts to the Federal Trade Commission by calling 1-877-382-4357 or by visiting reportfraud.ftc.gov.
Public Service Loan Forgiveness (PSLF)
If you are employed by a U.S. federal, state, local, or tribal government or not-for-profit organization, you might be eligible for the Public Service Loan Forgiveness Program. Keep reading to see whether you might qualify.