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Two Federal Courts Rule Against Biden's New Student Loan Forgiveness Plan on the Same Day
Both rulings were by Democratic-appointed judges - a result that bodes ill for the plan's future.

President Biden's new large-scale student loan forgiveness plan had a terrible, horrible, no good, very bad day. That's because two separate federal district courts ruled against its legality, in lawsuits brought by different coalitions of GOP-led states. Moreover, both of the judges who issued the rulings were Democratic Barack Obama appointees. That makes it hard to argue the decisions were a result of ideological or partisan bias, and is a very bad sign for the Administration's chances of prevailing on appeal.
The new loan forgiveness plan - known as the SAVE Plan - which would discharge at least $156 billion in federally backed student loan debt, is a successor to the one the Supreme Court invalidated in Biden v. Nebraska, last year, on the grounds that the Administration's actions were not authorized by Congress (that plan would have discharged some $430 billion in student debt).
While the administration claimed last year's plan was authorized by the 2003 HEROES Act, they have defended the new plan as an exercise of authority delegated by the Higher Education Act of 1965. But both plans use vague statutory language to justify a massive expenditure of funds and both are vulnerable to attack under the "major questions" doctrine, which requires Congress to "speak clearly" when authorizing an executive branch agency to make "decisions of vast economic and political significance." It was therefore foreseeable (and in fact foreseen) that the new plan might well suffer the same fate as the old, if challenged in court, and that is what happened today.
In Missouri v. Biden, federal district Judge John A. Ross issued a preliminary injunction blocking parts of the plan that forgive debt, as opposed to merely restructure it. He first had to address the issue of "standing" - whether Missouri and the other plaintiff states were likely to suffer an "injury" caused by the plan. Standing was a major issue in Biden v. Nebraska, one the Supreme Court resolved by ruling that the state of Missouri had standing because it has a state agency - the Higher Education Loan Authority of the State of Missouri (MOHELA) - that services federally backed student loans, and MOHELA's income would be reduced if some of those loans were forgiven. In a previous post, I noted that Missouri could use the exact same reasoning to get standing to challenge the new plan. Judge Ross agrees:
Here, Plaintiffs have established standing through the alleged injuries to MOHELA and thus to Missouri. The allegations in the Complaint are substantially similar to, if not identical to, those the Supreme Court held were sufficient to establish Missouri's standing just last year in Biden v. Nebraska. The Court finds no reason to reach a different result here.
The Final Rule calls for accelerated loan forgiveness for a set of borrowers with low initial principal balances who elect repayment through the SAVE plan and make a set number of qualifying payments. To the extent MOHELA services accounts subject to this early forgiveness—and there is no dispute that MOHELA does service such accounts—MOHELA will lose revenues from administrative servicing fee when those accounts are forgiven.
If Missouri has standing, the court concludes that it need not issue standing rulings for the other plaintiff states (again following the precedent set in Biden v. Nebraska).
On the merits, Judge Ross finds that the SAVE plan goes beyond what the statute authorizes:
According to Defendants, Congress intended to grant the Secretary [of Education] authority under the HEA to forgive balances on loans in the ICR [income contingent repayment] program by creating a maximum repayment period of 25 years or "an extended period of time prescribed by the Secretary." 20 U.S.C. § 1087e(d)(1)(D)…… Under this alleged authority, the Secretary has been providing loan cancellation for loans in the ICR plan since the first ICR regulations became effective in 1995.
Despite this history, the plain text of the statute does not support Defendants' position.
The Court is not free to replace the language of the statute with unenacted legislative intent…. It is true that offering forgiveness of loan balances after 25, or even 10, years of repayments to borrowers under the SAVE plan will ensure that fewer borrowers will default or become delinquent. These loan forgiveness provisions thus comport with the Secretary's expressed purpose for creating the Final Rule. But because the statute is silent on loan forgiveness under the ICR program, it is at least equally as likely that the HEA's time limitations in the ICR program refer to the maximum period that borrowers can be in repayment before the entire loan amount must be repaid or borrowers must default….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.
Later in the opinion, Judge Ross concludes that such a massive loan forgiveness plan clearly qualifies as a "major question," but also indicates that the plan is illegal even aside from the major questions doctrine. That doctrine merely further reinforces the plaintiff states' arguments:
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.
The court did reject some of the plaintiff states other arguments, and also would preserve parts of the SAVE plan that do not actually forgive debt, but merely alter payment schedules and the like. Nonetheless, Judge Ross's reasoning indicates that the most important provision of the plan (the one that would forgive vast amounts of student loan debt) is illegal, because not authorized by Congress.
In Alaska v. Department of Education (formerly known as Kansas v. Biden) Judge Daniel Crabtree of the District of Kansas reached a similar decision. The standing issue in this case was addressed in a previous ruling, where Judge Crabtree concluded only 3 of 11 plaintiff states have standing. Unlike Judge Ross, he held that giving one state standing does not resolve the standing issues for the rest. The state of Kansas, which initially led the litigation, was one of those that did not get standing, which to the case being renamed.
On the merits, Judge Crabtree's reasoning is very similar to Judge Ross's, except that he relies much more on the major questions doctrine:
To resolve plaintiffs' motion, the court must answer three questions.
First: does defendants' SAVE Plan present a "major question"—one of such economic
and political significance that defendants must show that Congress clearly authorized the SAVE Plan? In Biden v. Nebraska, 143 S. Ct. 2355 (2023), the Supreme Court answered this question. This recent, binding Supreme Court decision holds "that the basic and consequential tradeoffs inherent in a mass debt cancellation program are ones that Congress would likely have intended for itself." Id. at 2375 (quotation cleaned up). So, this is an easy yes.Second, given that the case presents a major question, have defendants shown that the Higher Education Act clearly authorizes their SAVE Plan? Biden v. Nebraska doesn't answer this question because that case addressed a different statute with a different regulatory history. While it's a close and difficult question, the court answers this second question no. Defendants have offered colorable, plausible interpretations of the Higher Education Act that could authorize the SAVE Plan, but those interpretations fall short of clear congressional authorization.
Last, the court must decide whether the preliminary injunction should apply nationwide. Scope aside, part of plaintiffs' requested injunction is unworkable, and so the court denies it. But, for the workable part of plaintiffs' injunction, the court reluctantly answers yes—it should apply nationwide.
I think Judge Ross's analysis is a bit better than Judge Crabtree's, and the case can be resolved even without applying the major questions doctrine. But if the statute is indeed unclear, both judges are right to conclude that MQD requires a ruling in favor of the plaintiffs.
Despite some differences, both courts have issued nationwide preliminary injunctions that block the Administration from engaging in most further loan forgiveness. Nationwide injunctions are the subject of extensive controversy. I think the two courts are right to issue nationwide injunctions here, because, as Judge Crabtree puts it, "[a] broad rule, like the SAVE Plan, requires a broad injunction, given the compelling need for nationwide uniformity in the Department's administration of student loan programs."
Both of today's decisions only address preliminary injunctions. They are not yet final decisions on the merits. However, both judges made clear they believe the plaintiffs are likely to prevail on key issues in any such final decision (such a likelihood of success is one of the criteria for getting a preliminary injunction).
The Biden Administration will surely appeal both rulings. But the fact they lost at the trial court level in both cases, despite litigating them before liberal Democratic appointees, is a strong indication they will face an uphill struggle. I am now even more confident than I was before that the most likely outcome of this litigation is that the SAVE Plan will suffer the same fate as its HEROES Act predecessor.
I believe the Supreme Court got it right in Biden v. Nebraska, and I think today's decisions were right to rule against the SAVE Plan. It is dangerous to empower the executive raid the treasury to spend money for purposes not authorized by Congress. For much the same reasons, I also opposed Donald Trump's attempt to divert military funds to build his border wall, which had a lot in common with Biden's student loan shenanigans.
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Oh, no, this is excellent news for Team Biden. That last CBO or GAO deficit estimate said this was going to push the yearly deficit up to $2 trillion. Now it will come back down by $156 billion, and he can take credit again for again lowering the yearly deficit.
Just in time to crow about it at the debate.
Is this a serious post?
Oh, you think that comment wasn't serious?
That anyone actually cares about the budget deficit.
Plenty of people care about the budget deficit. It's just that almost all of them are on the outside looking in.
Nah. Just about everyone who seems to also wants tax cuts aplenty.
Deficit hawks don't have the courage of their seeming convictions.
It's just another rhetorical cudgel.
Now do the best argument you can do in favor of the deficit hawk, lower taxes position. Show me that after all these years you've at least heard the argument, even if you don't agree with it. You can start with, "The best argument for deficit reduction and lower taxes, EVEN THOUGH I THINK IT'S WRONG, is..."
It shouldn't take more than a paragraph.
A lot of deficit hawk positions are based on mistaking sovereign debt for personal debt.
But it's not like I went to law school and hang around here for nothing.
- Managing the national deficit well is a natural check on the size of government, and all it's concomitant issues with corruption and clumsy policy and lack of freedom.
- In the long term, infinite debt is unsustainable.
- Taxes should be low because how to spend your own money is a freedom interest, so people should have their money to the greatest extent possible.
- Servicing the debt is inflationary. If you want more ability to react to inflation, you should keep the debt low.
Not a very good argument.
Here’s my simplistic try:
Government use of capital in the form of debt spending, as well as taxation, crowds out alternative uses of capital that drive not only aggregate wealth, but individual wealth almost all the way down the economic ladder. In an attempt to make people richer through income redistribution, many spending programs make people poorer through the inefficiencies of government-funded programs (e.g. cost of bloated bureaucracies, cost of interest on debt, cost of static misallocations of capital).
In theory, you’re helping people get a good education. In reality, you’re making an unproductive education appear [falsely] to be economically productive. You’re causing more people to get a lousy education that's not worth its cost.
I don’t buy crowding out as an argument. It’s shallow undergrad libertarianism.
1. It assumes a pure goal of wealth creation for society and I don’t think that holds. To steal a quote, growth for growth’s sake is the philosophy of a cancer cell, not a well-run society.
2. Crowding out does not apply across every sector.
Your private school example has plenty of historical counters of such a system not acting to grow wealth but rather to add to class divides. The British public schooling system [read: private schools] up through WW2 is a one. It did not add value, it added stratification.
That's why I went with the individual economic liberty as inherent good argument instead. Doesn't have as many baked in assumptions, just one big one.
Isn't this the kind of bad faith engagement you're supposedly against?
Just because our elected representatives don't actually care about the deficit doesn't mean that particular individual's (especially people commenting here) caring is inauthentic.
Perhaps you should do a bit less assuming. Unless of course your opposition to bad faith is itself bad faith.
You should do more reading. I didn't say 'the GOP doesn't care about deficits because no one does.' I said: "Just about everyone who seems to also wants tax cuts aplenty."
Another Magical Money Tree aficionado?
Oh yes, must be, he takes his insults so seriously.
No, I'm not an MMT adherent. Don't exclude the middle.
You have no middle. Your comment alone shows you have no middle. To take such an obvious joke about such a serious matter, and respond with such a silly insult to yourself in the guise of pretending to seriously not understand it, well, all you've really done is show you have no serious response, only a silly virtue signal. "Look, gang, I insulted this annoying commenter who insulted President Biden."
You're in a really offended mood this morning, much more than usual. And I'm in a really good mood this morning, having woken to such obvious targets for a little sarcasm.
I have no middle? I don't know what has you so riled up but it's pretty funny you say I'm super offended this morning and then come at me with 'You have no middle.'
I'm doing pretty well this morning, actually. Running ahead of schedule, did some good treadmill time, having leftover pizza for breakfast like the champion I am.
You know, I don't think Biden actually cares that the courts are ruling against him on this? At this point, actually long since, they KNOW what they're trying to do is illegal, and just don't care.
I suspect he's about 'this' far from just ordering the bureaucracy to ignore the injunctions.
Why do the courts bother, when Brett's done the statutory analysis already?
The courts have repeatedly told him to cut it out. They'd bothered multiple times, and he keeps coming back.
And you think that's because he deeply cares if he's doing something legal?
Exactly. Biden's team knows it's illegal. They're doing it ANYWAY and just saying, "we'll let the courts rule against us. Heads we win. Tails we get to say "we tried to get you free money"."
I've got to wonder, how far does this deceit extend.
Can Biden pass via executive order the "reparations" executive order, giving African Americans each $10,000 from the US Treasury? I can see the arguments from the liberal chorus "Well, no one was DAMAGED by it, so no one has standing to stop it. It works!"
What about the Biden-Buy Democrat votes Executive Order which gives registered Democrats in key swing states $1,000 cash? Does anyone have standing to stop that?
Hell, what about the "Hunter needs money" EO, which just flat out transfers a few billion to Hunter's private account from the US Treasury?... Who has standing to stop it?
Congress can impeach him for it.
By design, that may be the only check.
The courts have repeatedly told him to cut it out.
You're lying.
This is a completely different law, and so a completely different case.
You have had this explained to you, so you have no excuse to put out this untruth.
Where "completely different" means a different scrap of paper with a different title.
I've told you a million times to stop exaggerating.
So you don't care about the statutory language, and you're mad that I do.
OK, chief.
I at least read the post where the judges --- you know, the ones who make the official pronouncements on statutory interpretation --- disagree with your "completely different".
There. One simple quote showing an agreement between the two cases. So much for your "completely".
Your turn.
The allegations in the Complaint are that the action is outside the administration's statutory authority. It is the same allegation as the last one.
The administration is citing a different authority this time, as the OP notes. The HEROES Act was the previous authority; this attempt is via the Department of Education enabling statute.
When checking whether the government has acted outside it's authority, courts don't just check every authority, they check the one the government cites.
So it's a fundamentally different inquiry now.
And note the 'were promulgated in a manner exceeding the Secretary’s statutory authority' language. That's could be a procedural objection, which would further make this a different case.
So yeah, it's a new scrap of paper the court is looking at. Under the law, that matters a great deal.
And, yes, in your words and quite correctly: all it takes for the Biden administration to operate under a different law is a "new scrap of paper."
Let's not pretend there's a legal principle under which your student debt relief program should be justifiably cancelled. You just got two [more] Democrat-appointed judges telling you what those principles are, and unsurprisingly, you are unmoved.
Your evident principle: Screw the courts, except when they screw Republicans.
If you read below, I think it's not at all unlikely that the administration is exceeding it's authority here. And I think that there should be standing.
So you have yet again wrongly put me in a partisan box.
Saying that we should not short circuit the legal inquiry here, regardless of how it comes down, is not the same as saying the Biden admin is free and clear here.
"We should not short circuit the legal inquiry here."
Why not, Sarc? Where was the substantive legal inquiry on which the Biden administration based the fabrication of this huge new government program? "In response to the court having determined the program is unlawful, I have ordered the Secretary of Education to produce another scrap of paper, ASAP."
We certainly wouldn't want to short circuit the legal inquiry of the administration's scraps of paper, would we?
You analyze without any substantive legal principles. As you said below, "The major questions doctrine sucks." Consider that the major questions doctrine is intended to put a limitation on executive branch power that isn't supported by legislative statute. You oppose that limitation of executive power. But simultaneously you purport to support U.S. principles of democracy.
You're so weak, Sarcrates. Just lame.
Where was the substantive legal inquiry on which the Biden administration based the fabrication of this huge new government program?
Hot take - judges should do their jobs.
1. Read the cited enabling authority
2. Determine if the rule to establish the new program was properly promulgated under the ACA and the statute.
3. Determine what the scope of this authority is, based on the ACA and precedent and the text of the statute.
You analyze without any substantive legal principles
Pointing out other people don't seem to give a fig about the judicial process and just want their outcome is not deeply substantive no. But it is also not without legal principle.
The major question doctrine is made up, has no underlying authority nor clear contours. It is judicial imperialism, and it is bad. There are threads dedicated to the doctrine where this discussion is had in depth.
Yes, and next week Biden will invent yet another fictional statutory authority, emphasis on "fictional".
It's the same thing over and over, nothing but the excuse changes.
Oh, I'm sorry, did I say next week?
Try "today".
Begging the question and more telepathic finding of bad faith.
At what point could you be replaced with an LLM?
So, your position is that, Biden might be exceeding statutory authority, but no matter how many times he does so to the same end with minor variations, you're never going to admit he knows he's doing it?
Brett - its questionable if Biden knows what he is doing, though Biden's handlers know what they are doing exceeding any statutory authority to forgive the student loans. At the same time, Sarcastro knows full well that the Biden administration lacks the statutory authority to forgive the loans.
No, my position is that this is not a minor variation - it is a whole new statute.
If this is repeated enough, then pretext becomes easier to establish. As it is, 2 is not enough without more to say that.
I mean you can and do say it, it just has zero legal moment.
At the same time, Sarcastro knows full well that the Biden administration lacks the statutory authority to forgive the loans.
You assume a level of legal expertise I do not have. And a simplicity to the law that is not the case.
I don't have an opinion in this case as of yet. Part of that is me not reading the opinions in the OP yet.
But even if I did have an opinion, I'd realize it's an opinion not deep knowledge of the administration's authority.
Just because you have no humility and think yourself an expert on any and all subjects doesn't mean everyone is the same as you.
More bad faith.
When my side does something I think might be bad, I’m going to be cautious about calling it, claiming I need to get more info.
When those guys say something about it, I’m going to immediately pounce.
It would be fine to do this if you weren’t also immediately and quickly condemning other people, who may already be more informed about this than you (debatable, I realize) for attack your side in a very tribal way.
By your standard I should be pouncing on the opinions in the OP, Maddog.
I think the double standard you're seeing is cleared up by some discussion of what 'side' means.
Internet commenter makes a bad argument? I'll call that wrong and will go after it. Especially if they're saying they don't care about process. You should care about process.
A judge like those in the OP makes a bad judgement? They have some institutional authority, and I will be much more likely to reserve judgement regardless what side they're on. Especially if it's about a statute I don't know well.
(There are exceptions, see: Judge Ho, who writes like an Internet commenter and is also pretty bad on the law)
You're a liar.
You should show your work.
At what point do bar regs kick in?
You know, I don’t think Biden actually cares that the courts are ruling against him on this?
I'm not at all certain he knows that the courts are ruling against him.
Saw all the same jokes before the State of the Union.
Then the right said he was on drugs, followed by an awkward silence, followed by back to business as usual, the SoTU memory-holed as expected.
As a Taxpayer, I want to thank Judge Ross and Judge Crabtree for slapping down the Federal government hand trying to reach into our collective wallets.
Well to heck with the actual law, it's all outcomes for Commenter now.
Your mask is slipping more and more. I don't think I can remember any article which garnered so many desperate comments from you, all denying reality.
My mask?
You think I'm lying about my opinions or something?
I think it's fun to watch you ask questions as if you're Socrates, instead of saying anything substantial. You're the one pretending to be a serious commenter, not me.
Did you check my comment right below this one where I go in some depth into my substantive thoughts about this case?
It's been up a couple of hours, I'm not sure how you could have missed it.
"I think it’s fun to watch you ask questions as if you’re Socrates, instead of saying anything substantial."
Well said.
Yes.
Desperately denying reality is Sarcastr0's specialty.
I thought the first go-round was not on point statutorily; I find this a closer question as I read the text. Though I'm not the sort to say any court who finds in either direction is illegitimate; there are plenty of others who will rush in to do that.
Some violence *ahem* clarity will need to be added to standing to make this go, but that seems in the jurisprudential winds anyhow.
I'm all for an expansion of standing for when the President grants a benefit and you cannot challenge their authority to do so; seems messed up that would evade review under current law. But I am not optimistic such a clear exception will be made.
And the major question doctrine still sucks.
Is this the comment that you alleged contains your "substantive thoughts"?
Yeah, this is my thinking. What’s your issue?
Biden is buying votes, knowing the courts will keep him from actually exploding the deficit, AFTER the election.
Brandon is buying votes, but not those you might think.
Colleges are TERRIFIED of Fall 2026 when the babies not born in 2008 won't be turning 18 -- when there will be a demographic dropoff that is already starting to happen. Throw in a declining percentage going to college and the entire progressive wing of the Democratic Party (which is either in or associated with academia) is looking at major financial problem due to the lack of students paying tuition.
Throw in fear of being able to repay loans and there will be fewer students. Hence these efforts of Brandon are to assure HIGH SCHOOL JUNIORS that they will be able to avoid loan burden circa 2035 or so.
If only Missouri has standing should the injunction only apply to borrowers serviced by Missouri?
Wouldn't that raise equal protection issues?
The solution here is actually quite simple -- (a) go back to allowing student loans to be discharged in bankruptcy and (b) charge back a percentage of every loan that is to the college or university.
IANAA, and definitely IANAD&BA, but as I understand debt law, any loan in default past the state statute of limitations (usually six or seven years) is no longer collectable, except for student loans -- which also may not be discharged in bankruptcy. But prior to the current bankruptcy law, they could be once the default had passed the state statute of limitations for collection or something like that, I am not a Debt & Bankruptcy Attorney.
If a student loan has been in default for six or seven years, with the debtor not having enough assets and/or income to make it worthwhile for a debt collector to sue to collect it, then it ain't *ever* gonna get paid, and not just because of the interest -- again IANAD&BA but somehow each collection company is allowed to arbitrarily double the principal and accrued interest that is owed with the next doing the same so a loan that the debtor was unable to pay in the first place becomes an exponentially bigger loan the debtor is less able to pay.
So let it be discharged, or at least honor the state statute of limitation laws and stop garnishing social security checks, which is currently being done.
If the person didn't financially benefit from the loan -- if the person doesn't have income or assets after 6/7 years, then we should go back to the college and ask them to pay the loan because they sold a defective product.
But the colleges are a key part of Team Brandon and they can't...
Dr. Ed 2 2 hours ago
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The solution here is actually quite simple — (a) go back to allowing student loans to be discharged in bankruptcy and (b) charge back a percentage of every loan that is to the college or university.
To paraphrase Eisenhower - It is the education industrial complex (and employees, vendors, etc) that benefited from the student loans via the grossly inflated tuition. The Education industrial complex never had any risks, yet received the benefits.
If the loans are to be forgiven, make the benefactors incur the cost in exchange for the benefits they received. Of course the benefactors dont want the golden goose killed, much less acknowledge they were/are the problem
"The court did reject some of the plaintiff states other arguments, and also would preserve parts of the SAVE plan that do not actually forgive debt, but merely alter payment schedules and the like. Nonetheless, Judge Ross's reasoning indicates that the most important provision of the plan (the one that would forgive vast amounts of student loan debt) is illegal, because not authorized by Congress."
Based on what I read, I don't think this is correct. The parts of the SAVE plan that "merely alter payment schedules" are actually the most important, and end up indirectly affecting forgiveness more than anything. Seems like the most significant aspects are likely to remain in place.
- SAVE plan changes "discretionary income" basis of of income based payment calculations from 150% of poverty line based on family size to 225%
- SAVE plan recalculates payment count for 20/25 year forgiveness to include periods before consolidations and all time in repayment (loans are forgiven at 240 or 300 "payments" even if the payment was $0)
- SAVE plan waives any interest outstanding after application of each monthly payment (even if the "payment" is $0) so borrowers will no longer see interest accruing/capitalizing and balances growing over 200% of original principal, which is common
All of the above seems to be remaining in effect. While the following aspects of the SAVE plan are the only things stopped:
- Faster forgiveness timeline of 10 years for those who borrowed less than $12k
- Reduced income based payment calculation from 10% of discretionary income to weighted average of 5% for undergrad loans and 10% for grad loans
Well, Biden has always been a fool but because he has a law degree you never go after that angle. What puzzles me is that you don't count up the many legal rulings against the loan forgiveness and derive a bassically anti-law attitude of Biden
This has been his approach for decades: disrescpect for many and well-reasoned rulings against him.