Federal judge strikes down Biden’s student loan relief plan

A U.S. judge in Texas has blocked President Joe Biden's plan to provide millions of borrowers with up to $20,000 apiece in federal student-loan forgiveness — a program that was already on hold as a federal appeals court considers a separate lawsuit by six states, including Iowa, challenging it.

District Court Judge Mark Pittman, an appointee of former President Donald Trump based in Fort Worth, said Thursday the program usurped Congress' power to make laws.

"In this country, we are not ruled by an all-powerful executive with a pen and a phone. Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government," Pittman wrote.

He added: "The Court is not blind to the current political division in our country. But it is fundamental to the survival of our Republic that the separation of powers as outlined in our Constitution be preserved."

The debt forgiveness plan would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would get an additional $10,000 in debt forgiven.

The cancellation applies to federal student loans used to attend undergraduate and graduate school, along with Parent Plus loans.

The 8th U.S. Circuit Court of Appeals in St. Louis had put the forgiveness plan on hold Oct. 21 while it considered an effort by the Republican-led states of Nebraska, Missouri, Iowa, Kansas, Arkansas and South Carolina to block the program.

While the stay temporarily stopped the administration from actually clearing debt, the White House has encouraged borrowers to continue applying for relief, saying the court order did not prevent applications or the review of applications.

According to the White House, over 400,000 Iowa borrowers would see some student loan debt forgiven under the program. Of those, nearly 250,000 are Pell Grant recipients.

White House press secretary Karine Jean-Pierre said the administration disagreed with Thursday's ruling and the Department of Justice had filed an appeal. She said so far, 26 million people had applied for debt relief, and 16 million people had already had their relief approved. The U.S. Department of Education would "quickly process their relief once we prevail in court," she said.

"The President and this Administration are determined to help working and middle-class Americans get back on their feet, while our opponents backed by extreme Republican special interests sued to block millions of Americans from getting much-needed relief," she said in a statement.

The legal challenges have created confusion about whether borrowers who expected to have debt canceled will have to resume making payments come Jan. 1, when a pause prompted by the COVID-19 pandemic is set to expire.

Economists worry that many people have yet to rebound financially from the pandemic, saying that if borrowers who were expecting debt cancellation are asked to make payments instead, many could fall behind on the bills and default.

In his order Thursday, Pittman said the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act, did not provide the authorization for the loan forgiveness program that the Biden administration claimed it did.

The law allows the secretary of education to "waive or modify any statutory or regulatory provision applicable to the student financial assistance programs … as the Secretary deems necessary in connection with a war or other military operation or national emergency."

The administration argued that the student loan relief was thus authorized as a means of dealing with the national emergency of the pandemic. Pittman disagreed, finding that a program of such massive import required clear congressional authorization. The HEROES Act "does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program," he wrote.

Pittman also rejected the government's arguments that the plaintiffs who brought the lawsuit lacked standing. Plaintiffs Myra Brown and Alexander Taylor both have student loans, but Brown is ineligible for debt relief because her loans are commercially held, and Taylor is not eligible for the full $20,000 because he didn't receive a Pell grant.

The administration said they weren't harmed by the loan forgiveness program and their "unhappiness that some other borrowers are receiving a greater benefit than they are" did not give them grounds to sue.

Pittman said they were harmed, however, because the government did not take public comment on eligibility requirements for the program, meaning they had no chance to provide input on a program they would be at least be partially excluded from.

Reaction to the ruling was predictably mixed along political fault lines. The Student Borrower Protection Center blasted Pittman as a "right-wing federal judge," saying "tens of millions of student loan borrowers across the country now have their vital debt relief blocked as a result of this farcical and fabricated legal claim."

Elaine Parker, president of the Job Creators Network Foundation, praised the ruling and said it "protects the rule of law which requires all Americans to have their voices heard by their federal government." The Job Creators Network was founded by Bernie Marcus, a GOP donor who co-founded Home Depot.

"This attempted illegal student loan bailout would have done nothing to address the root cause of unaffordable tuition: greedy and bloated colleges that raise tuition far more than inflation year after year while sitting on $700 billion in endowments," Parker said in a statement. "We hope that the court's decision today will lay the groundwork for real solutions to the student loan crisis."

The Washington Post contributed to this report.