Biden’s plan faced its first substantive hurdle Friday evening, when the U.S. Court of Appeals for the 8th Circuit granted an administrative stay for one of the lawsuits, brought by six Republican-led states. The administrative stay is not a decision on the merits of the case, but rather a temporary pause until the court decides whether to grant an injunction.
Until Friday, it had appeared that the Biden administration was remaining clear of the legal challenges aimed by Republicans at its debt relief plan. A U.S. district judge had on Thursday dismissed the states’ lawsuit for lack of standing, the same day Supreme Court Justice Amy Coney Barrett denied a separate lawsuit by a conservative legal institute on behalf of a taxpayers’ association, which argued that Biden does not have the authority to waive debt so broadly and that the debt relief was unconstitutional.
The group, Wisconsin Institute for Law and Liberty, had earlier argued in a lawsuit filed in the U.S. District Court for the Eastern District of Wisconsin that the loan forgiveness was unconstitutional, in part because its aims to narrow the racial wealth gap amounted to an “improper racial motive.”
However, the group dropped the race-related part of its argument in its request to the Supreme Court. The district judge, William C. Griesbach, had dismissed the lawsuit for lack of standing.
The six Republican-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — have argued that the debt relief would lead to a drop in revenue stemming from the loans that were set to be forgiven. Judge Henry E. Autrey of the U.S. District Court for the Eastern District of Missouri wrote in his order that concerns over lost tax revenue were “merely speculative.”
In an op-ed published Saturday in USA Today, Cardona disputed the Republicans’ argument, saying they did not take issue with billions of dollars of pandemic relief for business owners in their states, with tax cuts for high-earners or with loan forgiveness that helped Republican members of Congress. “It’s only when relief is going to working and middle-class Americans that these elected officials have a problem,” he wrote.
Despite the lawsuits, Cardona encouraged eligible borrowers to apply for relief as the Education Department moves “full speed ahead with preparations for the lawful implementation of our program so we can deliver relief to borrowers who need it most,” he wrote.
In August, Biden announced plans to forgive up to $10,000 in federal student debt for individuals making up to $125,000, or up to $250,000 for married couples. Pell Grant recipients are eligible for another $10,000 in relief. Applications for relief are open until the end of next year, though the administration has encouraged borrowers to apply sooner in hopes that the cancellations could hit accounts before a pause on student loan payments expires Dec. 31.
Luke Herrine, a law professor at the University of Alabama who has argued that the president has the authority for widespread student debt cancellation, said debt relief could still come soon despite the hurdle in the federal appeals court. Herrine said that although it was not certain how the appeals court would rule, “I would expect them to uphold the District Court decision” against the Republicans’ suit.
He said he expects a decision from the appeals court “at least within a couple weeks” given that the stay was “an emergency motion.”
Borrowers seeking relief should still apply despite the legal noise, he said. “If you get your application in now, you’re more likely to get relief,” Herrine said. “There’s no harm in applying,” he added.
Danielle Douglas-Gabriel and Kelly Kasulis Cho contributed to this report.
This story has been updated to reflect that the lawsuit filed in U.S. District Court by the Wisconsin Institute for Law and Liberty included arguments that President Biden’s debt relief program had an “improper racial motive,” but that the group removed that part of its argument in its request to the Supreme Court.