Court cites harm to Missouri in stopping Biden's student loan forgiveness

A federal appeals court on Monday granted a nationwide temporary injunction stopping the Biden administration’s student loan forgiveness program.

The Eighth Circuit Court of Appeals in St. Louis halted President Joe Biden’s plan to forgive up to $20,000 in student loan debt. The next step in litigation could be an appeal to the U.S. Supreme Court.

“Whatever the eventual outcome of this case, it will affect the finances of millions of Americans with student loan debt as well as those Americans who pay taxes to finance the government and indeed everyone who is affected by such far-reaching fiscal decisions,” a three-justice panel wrote in the six-page ruling. “As such, we approach the motion before us with great care.”

The lawsuit was filed by Republican attorneys general in Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. Another federal judge rejected an injunction, stating a lack of legal standing in the case. However, the Court of Appeals agreed with the plaintiff’s argument. The judges said a state-run student loan servicing organization would be harmed and, therefore, the state’s institutions benefitting from its revenue.

The Missouri Higher Education Loan Authority would lose revenue if student loans were cancelled. The justices agreed MOHELA “may well be an arm of the State of Missouri under the reasoning of our precedent.” The justices noted MOHELA revenue supports the state’s public colleges and universities to create and fund capital projects.

Missouri law requires MOHELA to distribute $350 million into the state treasury for the education capital projects. MOHELA still owes $105.1 million as of June 30.

“This unanticipated financial downturn will prevent or delay Missouri from funding higher education at its public colleges and universities,” the justices wrote. “After all, MOHELA contributes to the Lewis and Clark Discovery Fund but has not yet met its statutory obligation.”

Missouri Republican Attorney General Eric Schmitt, who won the race to replace retiring Republican U.S. Sen. Roy Blunt last week, praised the decision.

“Millions of hard-working Americans have felt the pain of increased inflation and rising prices due to the Biden Administration’s disastrous policies,” Schmitt said in a statement. “The Biden Administration’s attempt to forgive student loan debt would saddle Americans who did not take out loans or who have paid their loans off already with even more economic woes. This is a big win for our Office and for Americans across the country, and we will keep up the fight.”

The judges wrote limiting the injunction to the plaintiff states “would be impractical and would fail to provide complete relief to the plaintiffs. MOHELA is purportedly one of the largest nonprofit student loan secondary markets in America. It services accounts nationwide and had $168.1 billion in student loan assets serviced as of June 30, 2022.”

Nebraska Republican Attorney General Doug Peterson praised the court’s understanding of the negative consequences of forgiving billions in student loans.

“The Eighth Circuit’s thorough analysis of the standing issue confirms that the States have a right to pursue this very important case,” Perterson said in a statement. “The court also recognizes that this attempt to forgive over $400 billion in student loans threatens serious harm to the economy that cannot be undone. It is important to stop the Biden administration from such unlawful abuse of power.”

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