The 8th Circuit US Appeals Court granted an emergency stay of U.S. President Joe Biden’s student debt cancellation plan requested by Missouri and other Republican states that immediately appealed a federal judge’s decision that they lack standing to sue.
The stay temporarily prohibits the Department of Education from discharging student loans until the federal appellate court decides on a longer-term injunction.
It was widely reported last week that Attorney General Eric Schmitt joined the attorneys general of Nebraska, Arkansas, Iowa, Kansas, and South Carolina in signing a notice of appeal with the Eighth Circuit Court of Appeals on the same day that U.S. District Judge Henry Autrey decided against the state prosecutors.
Henry E. Autrey
| enlightenedsentencing.com
“Because Plaintiff States – Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina – have failed to establish Article III standing, the Court lacks jurisdiction to hear this case,” wrote Autrey in his Oct. 20 decision. “While Plaintiffs present important and significant challenges to the debt relief plan, the current Plaintiffs are unable to proceed to the resolution of these challenges.”
The original complaint, filed on Sept. 29 in the U.S. District Court for the Eastern District of Missouri in St. Louis, alleges that the federal student loan forgiveness program violates the Administrative Procedure Act (APA) because it exceeds Secretary of Education Miguel Cardona’s statutory authority and is arbitrary and capricious.
“The Biden Administration’s executive action to cancel student loan debt was not only unconstitutional, but it will also unfairly burden working-class families and those who chose not to take out loans or have paid them off with even more economic woes,” Schmitt said. “The Biden Administration’s unlawful edict will only worsen inflation at a time when many Americans are struggling to get by.”
Specific to Missouri, the lawsuit argues that its Higher Education Loan Authority (MOHELA) will lose a vital established source of income if the debt relief program is allowed to proceed and that it deprives MOHELA of an asset it currently owns along with the ongoing interest payments and revenue the forgiven loans would have generated.
But Autrey ruled that the state of Missouri lacks standing and that the pleading failed to connect the alleged harms to MOHELA as harms to Missourians.
“Does Missouri establish it has the standing to sue on MOHELA’s behalf?” Autrey wrote in his Oct. 20 opinion. “Missouri has not met its burden to show that it can rely on harms allegedly suffered by MOHELA. MOHELA, not the State, is legally liable for judgments against it. MOHELA cannot pay any debt of the state, and the State is in no way obligated to pay any debt that it incurs.”
MOHELA was established in 1981 by statute, which provides that control by the state over MOHELA is limited to the Governor’s authorization to appoint five members of the seven-member board and requires a yearly report on its income, expenditures, bonds, and other forms of indebtedness issued.
"Missouri has not met its burden to show that it can rely on harms allegedly suffered by MOHELA," Autrey ruled. "MOHELA, not the State, is legally liable for judgments against it. MOHELA cannot pay any debt of the state, and the State is in no way obligated to pay any debt that it incurs."
U.S. Secretary of Education Miguel Cardona said that the temporary appellate court stay does not stop the Biden Administration from reviewing the millions of applications they have so far received. "We are moving full speed ahead to be ready to deliver relief to borrowers who need the help," he said. "As we continue our preparations in compliance with this order, we continue to encourage working- and middle-class Americans to apply for debt relief at studentaid.gov. President Biden and this Administration are committed to fighting for the millions of hardworking students and borrowers across the country.”