Federal rulings out of Kansas, Missouri put Biden student-loan forgiveness on hold

U.S. Secretary of Education Miguel Cardona speaks with families at the Mattie Rhodes Center in Kansas City, Missouri. (Annelise Hanshaw/Missouri Independent).Quality Journalism for Critical Times

Federal judges in Kansas and Missouri have blocked full implementation of a student-loan forgiveness program proposed by the Biden administration that was set to launch July 1.

The SAVE Plan, an acronym for Saving on a Valuable Education, has been partially rolled out. The provisions already in effect may remain, U.S. Judge Daniel Crabtree in Kansas ruled Monday. But elements set for July 1, like reducing payments to 5% of borrowers’ income instead of 10%, are on hold while litigation challenging the program moves forward.

A separate ruling out of the Eastern District of Missouri will block only loan forgiveness. The SAVE Plan offered forgiveness for those who borrowed less than $12,000 and have been paying for more than 10 years, with an additional year for each $1,000 additional borrowed.

Both judges wrote that the SAVE Plan, which uses the Higher Education Act to authorize approximately $475 billion in loan forgiveness, is beyond the law’s legislative intent.

“The court is not free to replace the language of the statute with unenacted legislative intent. Congress has made it clear under what circumstances loan forgiveness is permitted, and the [income-contingent repayment] plan is not one of those circumstances,” U.S. District Judge John Ross of Missouri wrote.

The rulings are the result of lawsuits filed by two coalitions of attorneys general: one led by Kansas Attorney General Kris Kobach and the other by Missouri Attorney General Andrew Bailey, representing a combined 18 states. Florida’s Republican Attorney General Ashley Moody joined the Missouri case.

Missouri Attorney General Andrew Bailey speaks to reporters outside the Western District Court of Appeals building in Kansas City on Oct. 30, 2023. (Rudi Keller/Missouri Independent).

Crabtree dismissed eight of the 11 states represented in Kobach’s lawsuit earlier this month, finding that Alaska is the only state that can claim harm in Monday’s ruling over “$100,000 in lost (federal family education) loan interest over two years.”

Ross determined that Missouri, through quasi-governmental loan servicer MOHELA, has standing. MOHELA, the Missouri Higher Education Loan Authority, gave Bailey standing in a U.S. Supreme Court case that overturned an earlier version of loan forgiveness last year.

Ross wrote that the allegations of harm to MOHELA are “substantially similar to, if not identical to,” those argued in last year’s Supreme Court case.

MOHELA has routinely distanced itself from Bailey’s litigation against loan forgiveness.

Lack of congressional authorization

Bailey, in a press release, lauded the Missouri ruling as a win for Missourians without large amounts of student-loan debt.

“Only Congress has the power of the purse, not the president,” he wrote in a statement. “Today’s ruling was a huge win for the rule of law, and for every American who Joe Biden was about to force to pay off someone else’s debt.”

Kobach emphasized the judge’s ruling of a lack of congressional authorization in the SAVE Plan.

“Kansas’s victory today is a victory for the entire country,” he said. “As the court correctly held, whether to forgive billions of dollars of student debt is a major question that only Congress can answer. Biden’s administration is attempting to usurp Congress’s authority. This is not only unconstitutional, it’s unfair. ”

U.S. Secretary of Education Miguel Cardona said the Department of Justice “will continue to vigorously defend the SAVE Plan.”

“We designed SAVE to cut undergraduate loan payments in half, avoid interest growth for borrowers making zero-dollar or low payments, and allow at-risk borrowers to reach forgiveness faster,” he wrote in a statement. “Under SAVE, nearly 8 million Americans — one out of five borrowers — have breathing room from bills that, too often, compete with basic needs.”

Cardona said Republican elected officials are trying to block the plan “even though the department has relied on the authority under the Higher Education Act three times over the last 30 years to implement income-driven repayment plans.”

He promised a continued push from the federal government for student-loan forgiveness. The SAVE Plan is the department’s second iteration of forgiveness, of which three have been announced. Bailey and Kobach wrote a letter to Cardona in May voicing “significant concerns” about the latest plan, which has yet to be implemented. Moody co-signed the letter.

This story first appeared in the Missouri Independent, a member with the Florida Phoenix in the nonprofit States Newsroom network. Michael Moline in Tallahassee contributed.

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