Can the Biden administration through the Department of Education use a very narrow loan forgiveness law to widely forgive student debt? NTUF joined an amicus curiae (“friend of the court”) brief with the Buckeye Institute and Kansas Justice Institute in the States’ application to vacate stay Alaska v. Department of Education to say no.
As we explained, after the U.S. Supreme Court struck down the Biden administration’s student loan forgiveness plan in 2023, the Administration is now attempting to implement the Saving on a Valuable Education (SAVE) plan. NTUF recently filed a comment opposing the proposed regulations, asserting that despite the new name, the SAVE plan is similar in scope and form to the earlier illegal plan.
Two sets of states have challenged the new plan. Our amicus curiae brief was filed in the Tenth Circuit case, where the appeals court was prepared to let the program go into effect. In response, Plaintiffs petitioned the Supreme Court for a writ of certiorari, asking the Court to overturn the Tenth Circuit’s stay of the preliminary injunction.
In our amicus curiae brief in support, we asked the Court to do away with the Tenth’s Circuit’s stay and continue pausing the program’s implementation. We argued, first, that student loan borrowers are required to pay back their loans and the law does not provide for any statutory exceptions to this requirement. When students take out a loan, they enter into a legally binding contract with the Department which requires repayment of the loan in full. Although federal law allows for a few statutory exceptions to this rule, such as the educational institution committing an illegal act, the plan does not fall into one of these exceptions. Simply put, the Department is required to collect the debt.
Our amicus curiae brief also disagreed with the Department’s assertion it has authority under 20 U.S.C. § 1087e(e)(5) to implement its proposed regulation. We explained that whatever very narrow loan forgiveness Congress may have provided for, “[i]t would be astonishing if Congress . . . gave the Department free reign to create its own broad forgiveness scheme.” Finally, we argued the proposed regulations violate the Appropriations Clause and Property Clause of the U.S. Constitution because it will cost the Treasury billions of dollars without providing for a pay back method or receiving authorization from Congress.
While this case was pending before the U.S. Supreme Court, the case brought by the other set of states in the Eighth Circuit, Biden v. Missouri (separate from the Biden case above and will be referred to as “Biden 2024”), resulted in the trial judge halting the plan’s implementation and the Eighth Circuit Court of Appeals not staying the injunction. Thereafter, the Biden administration filed for an application to vacate the injunction with the Supreme Court.
This week, the Supreme Court considered both applications and denied both Biden 2024’s application to vacate the Eighth Circuit’s injunction and Alaska’s application to the Tenth Circuit’s stay. In the Eighth Circuit case, the Supreme Court explained that “[t]he Court expects that the Court of Appeals will render its decision within appropriate dispatch.” In the Tenth Circuit case, the Court explained that “Applicants do not require emergency relief from this Court as long as the Eighth Circuit’s injunction in Missouri, et al. v. Biden, et al., case Nos. 24-2332 and 24-2351 is in place.” Put simply, with the Eighth Circuit pausing the program nationwide, the Supreme Court saw no need to issue a new order, so long as that remains the case.
Although this may seem complex, it is still a good sign for taxpayers. The Supreme Court has yet to endorse Biden’s SAVE plan. Moreover, while the Eighth Circuit’s injunction against the SAVE plan remains in place, it seems as though the government should not be able to fully enforce the SAVE plan’s provisions. We will continue to monitor these two cases and update you as they progress.