Things aren’t going well for President Biden’s student loan cancellation. On Monday the Eighth Circuit Court of Appeals enjoined the $400 billion write-off, its second legal defeat in days. This is what happens when the President subverts the law for election politics.
The appellate court’s unsigned opinion focuses on the threshold question of whether Missouri suffered a concrete and particular injury to sue. Missouri argued that the loan cancellation would cost its student loan servicer, Missouri Higher Education Loan Authority (Mohela), revenue and impose administrative burdens.
Missouri lawmakers established Mohela as a “public instrumentality” in 1981 in part to provide financial aid to students. A lower-court judge, however, ruled that lawmakers intended Mohela to be a “self-sustaining and financially independent agency.” Ergo, Missouri couldn’t sue since the state wasn’t directly harmed by the loan write-off.
The Eighth Circuit disagreed, noting that state law specifically directs Mohela to distribute $350 million into a state fund for capital projects at public colleges, among other things. Mohela still owes $105 million. The Administration’s loan write-off could impair its obligation and threaten financial harm to the state.
After granting Missouri legal standing, the court explained that the equities “strongly favor an injunction” since the debt cancellation would have an irreversible impact on the state while an injunction wouldn’t currently harm borrowers. That’s ironically because the Administration extended its student loan payment pause through December.
Conservatives have criticized liberal judges for issuing universal injunctions that pre-empt other lower courts from forming their own decisions. But in this case the Eighth Circuit noted it would be impractical to limit an injunction to Missouri and its fellow plaintiff states since Mohela services some $168 billion in student loans from borrowers nationwide.
“We discern no workable path in this emergency posture for narrowing the scope of relief,” the court writes. The Eighth Circuit ruling follows a Texas federal judge’s vacatur on Thursday in a case brought by two borrowers who argued the Administration violated their procedural rights by not undertaking notice and comment.
Missouri strikes us as having the stronger case on the question of standing. But the important point is to stop loans from being canceled, which would do irreparable harm to the constitutional separation of powers and national fisc. If Republicans take the House, they could also sue the Administration for usurping the chamber’s power of the purse.
Mr. Biden’s loan write-off is the largest presidential abuse of power in decades, and it’s good to see courts stepping up to their obligations to enforce the Constitution. This case may be heading to the Supreme Court.
