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‘Almost Certainly Unlawful’: Federal Appeals Court Blocks Biden Student Loan Giveaway

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OPINION: This article may contain commentary which reflects the author's opinion.


A federal appeals court has slammed the gavel down on President Joe Biden’s latest effort to forgive more federal student loans, calling the action “almost certainly unlawful.”

The 5th U.S. Circuit Court of Appeals in New Orleans on Thursday overturned a lower court judge’s decision and directed him to issue a preliminary injunction blocking Biden’s debt relief plan nationwide, according to Reuters.

According to U.S. Circuit Judge Edith Jones, who wrote for a three-judge panel, Career Colleges and Schools of Texas, which has been opposing Biden’s debt cancellation policy, is likely to be able to prove in court that the U.S. Department of Education does not have the authority under the Higher Education Act to cancel $430 billion in student loans for 43 million students.

Jones’ opinion comes in the case of Career Colleges and Schools of Texas v. United States Department of Education, et al, in the 5th U.S. Circuit Court of Appeals, No. 23-50491.

The rule utilized to discharge the debt was officially approved in October 2022, featuring modifications that broadened the eligibility criteria for students seeking debt relief if they were “misled” by their for-profit educational institutions.

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Jones added that the regulation suffers from a “pantheon of legal problems” and “numerous statutory and regulatory shortcomings.”

One section of the new rules is a “borrower-defense” provision that permits students to seek debt cancellation if they believe their institute of higher learning gave them false promises.

But Jones said the provision only allows borrowers to apply for forgiveness onlyafter they have been sued for defaulting, not just “affirmative ‘claims’ that borrowers can assert against schools to avoid their obligations.”

The Biden administration sought to focus the rule only on Career Colleges and Schools of Texas (CCST) loans, but Jones also dismissed that policy, saying that the focus is “incoherent in light of its use of the Rule to prescribe uniform federal standards.”

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In June 2024, the U.S. Supreme Court struck down the Biden administration’s plan to erase up to $10,000 in federal student loan debt for borrowers and up to $20,000 for recipients of Pell Grants.

The Supreme Court heard oral arguments in the cases of Department of Education v. Brown and Biden v. Nebraska, both of which asked the court to invalidate President Biden’s student loan debt reduction initiative launched in August. The program erased up to $10,000 in student loan debt for individuals who did not get Pell Grants; for those who did, it forgave up to $20,000 in debt.

“More than three years after payments were paused and interest rates on the loans were reduced to 0% in March 2020 during the Trump administration and extended multiple times under Biden, student loan interest will begin accruing again on Sept. 1 and payments will be due in October. The Department of Education told FOX Business earlier this month it will notify the more than 40 million student loan borrowers ‘well before payments restart,’” Fox Business reported.

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In his opinion, conservative Chief Justice John Roberts cited a previous argument made by former House Speaker Nancy Pelosi.

Roberts referenced Pelosi’s assertion that Biden lacked the authority to implement the forgiveness program on his own in remarks she made on July 28, 2021, during a press conference with reporters.

“People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress,” Pelosi said at the time, Business Insider reported.

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