Dive Brief:
- A federal judge in Texas on Thursday evening declared President Joe Biden’s plan to broadly cancel chunks of student debt illegal, handing a win to conservatives who deemed it government overreach and financially reckless.
- U.S. District Judge Mark Pittman, an appointee of former President Donald Trump, wrote in his ruling the Biden administration unlawfully veered into policy territory that should be reserved for Congress. His order strikes down the loan forgiveness program nationwide, effective immediately.
- Education Secretary Miguel Cardona said in a statement the department would appeal the ruling. "We believe strongly that the Biden-Harris Student Debt Relief Plan is lawful and necessary to give borrowers and working families breathing room as they recover from the pandemic and to ensure they succeed when repayment restarts," Cardona said.
Dive Insight:
Conservatives lodged legal challenges against Biden’s student loan forgiveness program shortly after he announced it in August.
A common thread among the lawsuits is accusations that the Education Department overstepped in moving to wipe away federal student loan debt. The program would forgive as much as $10,000 for individual borrowers earning up to $125,000 a year, and up to $20,000 for those who received federal Pell Grants while in college. Pell Grants serve as a proxy for low- and moderate-income status.
Few of those lawsuits found success. Even a Trump appointee to the U.S. Supreme Court, Amy Coney Barrett, declined to intervene in cases seeking to shoot down the plan.
However, in recent weeks the program has looked more in jeopardy. A federal judge late in October temporarily paused the plan in a lawsuit filed by six Republican-led states.
The Education Department still accepted applications for debt relief and said recently it was preparing to provide it to a first round of 16 million borrowers.
Pittman ruled in a lawsuit brought by two college graduates, Alexander Taylor and Myra Brown, who alleged the administration arbitrarily decided who qualified for debt forgiveness. They were backed by the Job Creators Network Foundation, an organization dedicated to fighting against what it considers poor government policy.
Taylor, who financed his undergraduate degree from the University of Dallas with student loans, objected to being ineligible for the additional relief going to Pell Grant recipients.
Brown also took out loans, but through the defunct Federal Family Education Loan, or FFEL, program, which makes them privately held.
The White House initially said borrowers could consolidate FFEL loans into Direct Loans, thus qualifying for the debt relief. But the Education Department backed away from that policy in September, which legal experts said was likely to ward off lawsuits.
The Biden administration justified its authority to broadly cancel debt with a 2003 law known as the Higher Education Relief Opportunities for Students, or HEROES, Act.
This law permits the secretary of education to make federal financial aid changes during war or other national emergencies. The administration said the coronavirus pandemic qualifies as such an emergency
Pittman disagreed that the HEROES Act gave the secretary that power.
“The Court is not blind to the current political division in our country,” he wrote. “But it is fundamental to the survival of our Republic that the separation of powers as outlined in our Constitution be preserved.”
Critics blasted Pittman’s decision.
The Student Borrower Protection Center, an advocacy group, in a statement called Pitman a “right-wing federal judge” who fell in step with conservative politicians.
The group called on Biden to continue to freeze student loan payments, which have not been required since the early days of the pandemic. That moratorium is due to expire at the end of the year.
“The Biden Administration must use this decision as an opportunity to make it clear that the student loan system will remain shut off as long as these partisan legal challenges persist,” said Mike Pierce, the group’s executive director. “Student loan borrowers should never be sacrificed as pawns in Republicans’ political games.”
This piece has been updated with a statement from Education Secretary Miguel Cardona.
