The US Court of Appeals for the Eighth Circuit Friday temporarily stayed the Biden administration’s federal student loan forgiveness plan. Arkansas, Missouri, Nebraska, Iowa, Kansas, and South Carolina sued President Joe Biden, asserting the plan poses a threat of imminent harm in the form of lost tax revenue, is an unlawful regulatory action and that Biden lacks authority to implement the plan. In addition, each state contends that they plan on taxing federal student loan discharges. Last Thursday, a lower court ruled that the states lacked standing because their future harm was too speculative, and the case was dismissed. The next day, the states appealed the decision and filed an emergency motion for injunction pending appeal.
The states argue that they have standing to bring their complaint due to their direct tax losses. Additionally, they assert that the presence of one party with standing is enough to satisfy Article III of the US Constitution’s Case or Controversy clause, and the Higher Education Loan Authority of the state of Missouri is a public instrumentality of the state which stands to be harmed by the plan. The motion also argues that the states will likely prevail on the claim that the Department of Education (DOE) exceeded its authority under the HEROES Act. The act allows the DOE to waive or modify federal student loan programs in the face of a national emergency. Biden’s administration cited the COVID-19 pandemic as the national emergency which made the HEROES Act applicable. The states also assert they will face irreparable harm without an injunction.
In response to the temporary hold, DOE Secretary Miguel Cardona encouraged eligible Americans to continue to apply for debt relief despite the order. The application for student loan forgiveness officially opened Monday and remains open for applications.