President Joe Biden’s latest plan to do an end-around of the Supreme Court and force student loan forgiveness hit a roadblock on Monday when a U.S. District Court Judge partially granted a preliminary injunction of the latest Department of Education rule creating a new income-driven repayment plan referred to as the “Savings on Valuable Education” (SAVE) plan.
Missouri Attorney General Andrew Bailey (R), whose office filed a complaint seeking the injunction in April, along with the states of Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma, announced the win late Monday afternoon on X:
🚨BREAKING: The Court has granted our motion to BLOCK Joe Biden’s illegal student loan plan.
Congress never gave Biden the authority to saddle working Americans with half-a-trillion dollars in other people’s debt.
A huge win for the Constitution.
— Attorney General Andrew Bailey (@AGAndrewBailey) June 24, 2024
Bailey’s office also issued a press release regarding the ruling:
Today, Missouri Attorney General Andrew Bailey announced that the Eastern District of Missouri granted his motion to block Joe Biden’s latest illegal student loan cancellation scheme. His lawsuit targeted what the federal government calls the “SAVE” Plan, which in reality would have cost Americans $475 billion – $45 billion more than its last unlawful student loan plan. The Court’s order blocks the unconstitutional student loan cancellation scheme from taking effect on July 1.
“During my time in the United States Army, I swore an oath to protect the Constitution against enemies both foreign and domestic. I took a similar oath to uphold the Constitution when I was sworn in as Attorney General,” said Attorney General Bailey. “By attempting to saddle working Missourians with Ivy League debt, Joe Biden is undermining our constitutional structure. Only Congress has the power of the purse, not the President. Today’s ruling was a huge win for the rule of law, and for every American who Joe Biden was about to force to pay off someone else’s debt.”
The United States Supreme Court ruled in favor of Attorney General Bailey’s previous challenge to the Biden Administration’s unilateral and unlawful wealth transfer of hundreds of billions of dollars in student loan debt. In a 6-3 decision, the Court struck down Biden’s repayment plan as unconstitutional, citing the massive $430 billion-plus impact on the federal budget without express authority from Congress. The Court held that Missouri’s student loan servicing company, MOHELA, was an arm of Missouri’s state government, and therefore, granted the states standing to challenge the student loan plan.
Joining General Bailey in filing suit were the attorneys general of Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma.
In the suit, the States asserted, “Just last year, the Supreme Court struck down an attempt by the President to force teachers, truckers, and farmers to pay for the student loan debt of other Americans—to the enormous tune of $430 billion. In striking down that attempt, the Court declared that the President cannot ‘unilaterally alter large sections of the American economy.’ Undeterred, the President is at it again, even bragging that ‘the Supreme Court blocked it. They blocked it. But that didn’t stop me.’”
The States noted, “Yet again, the President is unilaterally trying to impose an extraordinarily expensive and controversial policy that he could not get through Congress. This latest attempt to sidestep the Constitution is only the most recent instance in a long but troubling pattern of the President relying on innocuous language from decades-old statutes to impose drastic, costly policy changes on the American people without their consent.”
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The full order, issued by District Judge John Ross, may be viewed here, but here are some key points made in it:
Plaintiffs’ alternative reading—that § 1087e(d)(1)(D)’s language does not permit loan forgiveness under the ICR program—finds support in other portions of the HEA that explicitly permit loan forgiveness. Congress has made it clear under what circumstances loan forgiveness is permitted, and the ICR plan is not one of those circumstances. See Biden v. Nebraska, 143 S. Ct. at 2363 (“[The HEA] authorizes the Secretary to cancel or reduce loans, but only in certain limited circumstances and to a particular extent.”).19 Defendants counter that Congress required forgiveness under programs like IBR and PSLF but left forgiveness under ICR up to the discretion of the Secretary. But considering the loan repayment scheme under the HEA in its entirety, the Court finds Defendants’ interpretation is questionable. Plaintiffs, therefore, have a “fair chance” of success on the merits on their claim that the Secretary has overstepped its authority by promulgating a loan forgiveness provision as part of the SAVE program. Cigna Corp v. Bricker, ___ F.4th ___, 2024 WL 2839930, at *3 (8th Cir. 2024 June 5, 2024).
…
Here, there is no real dispute that the Secretary’s Final Rule touches on issues of vast economic and political significance and therefore may implicate the major questions doctrine. But to the extent it is necessary to invoke the major questions doctrine here at this stage of litigation, it merely confirms what the Court has found using the typical tools of statutory interpretation. Under the express terms of the HEA, the Secretary has clear congressional authority to promulgate the vast majority of the provisions of the Final Rule. The HEA is not ambiguous regarding its grant of discretion to the Secretary as to setting ICR repayment schedules and determining the extent of interest capitalization as to loans in an ICR repayment plan like SAVE. But Defendants have failed to point to a clear congressional authorization for the loan forgiveness provisions of the Final Rule, and the Court has found none. While the Secretary does not appear to be expressly precluded from forgiving loans under his ICR authority, it is far from clear that Congress has expressly granted the Secretary such authority. Thus, Plaintiffs have a “fair chance” of success on the merits on their claim that the Final Rule violates separation of powers principles. Cigna Corp, 2024 WL 2839930, at *3.
…
[T]he Court finds that it is appropriate to limit a preliminary injunction to only those provisions of the SAVE plan that permit loan forgiveness. As litigation progresses, the Court can determine whether that preliminary injunction should become permanent or if any other portions of the Final Rule require additional injunctive relief.
What this means is that the portion of the rule dealing with loan forgiveness is on hold until the matter is decided on the merits. Similarly, a Kansas federal judge issued a nationwide preliminary injunction on the loan forgiveness provision Monday in a case brought by Kansas, Alaska, South Carolina, and Texas.
Blue collar Kansas workers who didn’t go to college shouldn’t have to pay off the student loans of New Yorkers with gender studies degrees. https://t.co/zcY4z6n0H7
— Kris W. Kobach (@KrisKobach1787) June 25, 2024
Again, note that these are preliminary rulings. But for now, the loan forgiveness portion of Biden’s efforts are on hold.
