Judge Rejects Challenge to Biden Administration’s Student Debt Relief Program

President Joe Biden delivers remarks in Hagerstown, Md., on Oct. 7, 2022. Chip Somodevilla/Getty Images

A federal judge on Oct. 20 rejected a legal challenge to the Biden administration’s student debt relief program.

Missouri and five other states that sued the government over the program do not have standing, U.S. District Judge Henry Edward Autrey, a George W. Bush appointee, ruled.

The complaint centered in part on the alleged harms that the Higher Education Loan Authority of the State of Missouri (MOHELA) will suffer as a result of the program.

But Missouri failed to connect the alleged harms to the state, Autrey said.

“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,” he ruled.

Other states argued that the program would harm them but the Biden administration resolved the issues they offered, including scrapping the plan to consolidate certain federal loans into Direct Loans, which are issued under a different program, the judge added.

“Because Plaintiffs seek only prospective relief, they must articulate an ongoing injury. The lack of the ongoing incentive to consolidate defeats the claims of Arkansas and Nebraska,” he said.

The remaining states sued over what they described as a looming loss of tax revenue because they do not allow taxes of student loan discharges.

“These future lost tax revenues are merely speculative. Moreover, there is nothing imminent about what may happen several years in the future. The Department’s student loan debt relief plan does not prohibit the States from proposing, enacting, or implementing legislation. These States’ sovereign power to set its own tax policy is not implicated by the student debt relief plan, and their legislatures are free to propose and pass tax revenue plans as they see fit,” the judge said.

Hours after the ruling, the states filed a notice of appeal. They also asked Autrey to enter an injunction against the student debt relief until the appeal is adjudicated.

Once the relief program starts, “the States will be unable to remedy the full scope of all the harms they are experiencing,” the motion to stay stated.

If a stay is not granted, the government could relieve $80 billion to $100 billion as soon as Sunday, the plaintiffs said.

Autrey has not yet ruled on the motion.

Multiple other challenges have been filed against the program, which the government says is authorized due to the COVID-19 emergency under the Higher Education Relief Opportunities for Students Act.

Judges have dismissed or ruled against several of them. On Thursday, Supreme Court Justice Amy Coney Barrett, a Trump appointee, rejected an emergency appeal from Wisconsin taxpayers in one of the cases.