A federal judge in Texas on Thursday rejected President Joe Biden’s executive action to cancel hundreds of billions of dollars in student debt, further clouding the situation for millions of borrowers who have applied to a program already on hold because of legal obstacles.
“In this country, we are not ruled by an all-powerful executive with a pen and a phone,” Judge Mark Pittman of the U.S. District Court for the Northern District of Texas wrote in his 26-page decision, siding with the conservative advocacy group that had brought the case.
The law Biden cited to justify his action — the Heroes Act of 2003, which allows the education secretary to waive regulations related to student loans during times of war or national emergency — does not provide “clear congressional authorization” for the president’s action, Pittman wrote.
The Biden administration said Thursday night that the Justice Department had appealed the decision, which ran contrary to the rulings of other district court judges around the country who had rejected other plaintiffs’ challenges for lack of standing.
“The president and this administration are determined to help working and middle-class Americans get back on their feet, while our opponents — backed by extreme Republican special interests — sued to block millions of Americans from getting much-needed relief,” Karine Jean-Pierre, the White House press secretary, said in a statement.
Biden’s plan was already on hold after the U.S. Court of Appeals for the 8th Circuit granted a temporary stay last month in response to an appeal filed by six Republican-led states, while the appeals court considers their request for an injunction blocking any debt cancellation.
Nearly 26 million borrowers have applied to have federal student loan debt wiped out through the plan Biden announced in August, and the government has already approved 16 million applications, the president said on Twitter last week. But no debt will be canceled unless the courts allow the Education Department, which owns the loans, to proceed. Jean-Pierre said the department would hold on to applicants’ information “so it can quickly process their relief once we prevail in court.”
The issue is widely expected to end up before the Supreme Court.
Justice Amy Coney Barrett has, without comment, rejected two previous challenges to Biden’s debt cancellation plan. Last month, she turned away a case brought by a taxpayers’ association in Wisconsin, and last week, she rebuffed a complaint from borrowers in Indiana. In both cases, lower courts had previously rejected the challenges.
The Texas case was backed by the Job Creators Network Foundation, an affiliate of a right-leaning small business trade group, on behalf of two federal student loan borrowers. One is ineligible for relief under Biden’s plan because her federal loans do not qualify for cancellation. The other did not qualify for the plan’s maximum relief of $20,000, which was reserved for borrowers who also received Pell grants for low-income families. Their complaint called Biden’s plan “irrational, arbitrary and unfair.”
“This ruling protects the rule of law,” said Elaine Parker, the foundation’s president. “We hope that the court’s decision today will lay the groundwork for real solutions to the student loan crisis.”
Biden’s plan would cancel up to $10,000 in debt for those earning less than $125,000 per year and up to $20,000 for those who had received Pell grants. It would be one of the most expensive executive actions in history, with a price tag the nonpartisan Congressional Budget Office estimated at $400 billion.
Pittman, who was appointed in 2019 by President Donald Trump, found that the plaintiffs have standing because, among other factors, they “have a concrete interest in having their debts forgiven to a greater degree” than Biden’s plan allowed and would be harmed if it proceeded as planned. And he wrote that the debt cancellation “is an agency action of vast economic and political significance” and is subject to the “major-questions doctrine,” a judicially created principle that requires Congress to explicitly authorize sweeping actions by government agencies.
That principle, which the Supreme Court relied on in its recent decision to limit the Environment Protection Agency’s powers, has also been raised by the states pursuing their case in the 8th Circuit appeals court.
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