U.S. appeals court rejects Biden proposal to restart student debt plan

Nov 30 (Reuters) – A federal appeals court on Wednesday refused to set aside a Texas judge’s ruling that said President Joe Biden’s plan to cancel hundreds of billions in student loan debt was illegal.

The 5th U.S. Circuit Court of Appeals in New Orleans rejected the Biden administration’s request to suspend the judge’s Nov. 11 trial. Order 10 undoes a $400 billion student debt relief program in a lawsuit brought by a conservative advocacy group.

Fort Worth, Texas-based U.S. District Judge Mark Pittman’s decision is one of two nationwide to block the U.S. Department of Education under a Democratic president from extending debt relief to millions of borrowers.

The administration has asked the U.S. Supreme Court to similarly lift the St. Louis order. The St. Louis-based 8th U.S. Circuit Court of Appeals barred student loan cancellations at the request of six Republican-led states.

In a brief order Wednesday, three Fifth Circuit judges declined to set aside Pittman’s ruling while the government appeals his decision, but the court directed an expedited review of the appeal.

The panel included two Republican appointees and a judge nominated by then-Democratic President Barack Obama. Pittman was appointed by then-Republican President Donald Trump.

The White House had no immediate comment, but the administration said it would ask the U.S. Supreme Court to intervene if the Fifth Circuit declined to stay Pittman’s order.

Biden announced in August that the U.S. government would forgive up to $10,000 of student loan debt for borrowers making less than $125,000 a year or $250,000 for married couples. Students receiving Pell Grants to benefit low-income college students will have up to $20,000 in debt forgiven.

During the 2020 presidential campaign, Biden pledged to help debt-ridden former college students. Biden’s plan has been opposed by Republicans, who have described it as shifting the debt burden from wealthy elites to lower-income Americans.

The Congressional Budget Office calculated in September that running the debt relief program would cost taxpayers about $400 billion.

Roughly 26 million Americans have applied for student loan forgiveness, and by the time Pittman issued his ruling, the Department of Education had approved 16 million requests.

Biden announced last week that his administration would extend a moratorium on student loan payments to ease uncertainty for borrowers while a lawsuit against the debt relief program unfolds.

Pittman ruled in a lawsuit by two borrowers who were partly or completely ineligible for loan forgiveness, backed by the Job Creators Network Foundation, a partnership led by Home Depot co-founder Bernie Maku. Conservative advocacy group founded by Adams.

The judge said it didn’t matter whether Biden’s plan was good public policy because it was “one of the largest acts of legislative power without congressional authority” in American history.

Pittman wrote that the HEROES Act — a law that provides loan assistance to military personnel under which the Biden administration created the relief program — did not authorize the program.

Elaine Parker, president of the Job Creators Network Foundation, said in a statement that the Fifth Circuit’s order on Wednesday blocked the government’s attempt to “transfer money to debtors and prevail” during an appeal.

Reporting by Nate Raymond in Boston; Editing by Tom Hogue and Robert Birsel

Our Standards: The Thomson Reuters Trust Principles.


Thomson Reuters

Nate Raymond reports on federal justice and litigation. He can be reached at nate.raymond@thomsonreuters.com.

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