Texas Asks Supreme Court to Consider Challenge to Student Loan Relief Plan

Education Secretary Miguel Cardona (R) looks on as President Joe Biden delivers remarks on the student debt relief portal beta test, in the South Court Auditorium of the Eisenhower Executive Office Building, next to the White House, in Washington, on Oct. 17, 2022. Brendan Smialowski/AFP via Getty Images

Texas told the Supreme Court on Aug. 10 that it wants to press on with a pending emergency application to halt the U.S. Department of Education’s proposed student loan relief plan even after a federal appeals court blocked key parts of it.

Alaska, South Carolina, and Texas filed an application in the complex, heavily litigated case with the Supreme Court on July 5, asking the court to halt the department’s SAVE plan. The plan would cancel some student loan debt and has an estimated price tag of $475 billion. The case is known as Alaska v. Department of Education.

The SAVE plan, first proposed by Education Secretary Miguel Cardona in August 2022, would lower monthly payments for millions of eligible borrowers and accelerate loan forgiveness for some borrowers. SAVE is an acronym that stands for Saving on a Valuable Education.

A reported 8 million borrowers have signed up for the program.

The SAVE plan wasn’t yet finalized in June 2023 when the Supreme Court struck down President Joe Biden’s previous $400 billion student loan forgiveness plan in Biden v. Nebraska.

On Aug. 9, the U.S. Court of Appeals for the Eighth Circuit temporarily paused parts of the SAVE plan while the litigation over it continues. The circuit court found that the states challenging it—Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma—would likely be able to prove the plan violates the major questions doctrine.

The major questions doctrine holds that courts should presume Congress doesn’t delegate important policy questions to government agencies.

The circuit court’s injunction prevents the federal government from forgiving principal or interest on outstanding student loans, halts a provision stopping interest from accruing on loans, and blocks a provision allowing borrowers to make very low or zero monthly payments geared to income.

Hours after the ruling, Cardona posted on X, saying, “I strongly disagree with the Eighth Circuit’s decision blocking our Administration’s SAVE plan.”

“But here’s the info you’re really looking for: Borrowers currently enrolled in SAVE will be placed in an interest-free forbearance. [The Department of Education] will provide updates in the coming days.”

Before that, on June 24, at the request of two coalitions of Republican-led states that brought separate lawsuits, two federal district judges temporarily blocked parts of the SAVE plan while the cases work their way through the courts. They both found the department lacks authority to enact certain aspects of the plan under the federal Higher Education Act.

U.S. District Judge Daniel Crabtree in Kansas ruled that the parts of the plan already in effect may continue but blocked provisions that were supposed to take effect on July 1. One of those blocked provisions would have limited payments to 5 percent of a borrower’s income from 10 percent.

Previously, on June 7, Crabtree ruled that Alaska, South Carolina, and Texas “just barely” had legal standing to challenge the SAVE plan because they had shown the plan would have an adverse effect on state revenues.

Standing refers to someone’s right to sue in court. The parties must demonstrate they have a strong enough connection to the action complained of to justify their participation in a lawsuit.

In the same order, Crabtree found that Alabama, Idaho, Iowa, Kansas, Louisiana, Montana, Nebraska, and Utah lacked standing and couldn’t continue participating in the case.

The order by U.S. District Judge John Ross of Missouri blocked student loan forgiveness.

On June 30, the U.S. Court of Appeals for the Tenth Circuit put a temporary hold on Crabtree’s order and allowed income-contingent repayments to begin. The stay will remain in effect while the appeal remains pending.

Then, on Aug. 10, Texas Solicitor General Aaron Nielson said in a filing with the Supreme Court that while the Eighth Circuit’s injunction halting aspects of the SAVE plan gave the state much of what it wanted, the circuit court ruling left some questions unanswered.

The U.S. Supreme Court in Washington on July 29, 2024. Madalina Vasiliu/The Epoch Times

The circuit court “enjoined the federal government ‘from any further forgiveness of principal or interest, from not charging borrowers accrued interest, and from further implementing SAVE’s payment-threshold provisions’ with respect to ‘any borrower whose loans’ are subject to the plan.”

Although the Eighth Circuit’s injunction doesn’t provide Alaska, South Carolina, and Texas with “the full relief they seek … there is sufficient overlap to negate the need for emergency relief from this Court so long as that injunction remains in effect.”

Nielson also said the circuit court didn’t rule on related questions that Texas would like answered. He referred to the three states’ application which asked whether the department violated the federal Administrative Procedure Act by giving the public an unusually short period to comment on the SAVE plan before it was finalized.

The application said the department gave the public “only a month … to comment on a plan … that will cost taxpayers nearly half a trillion dollars.”

In the meantime, the Supreme Court should treat the emergency application in Alaska v. Department of Education as a petition for certiorari, or review, grant the petition, and schedule oral arguments, Nielson said in his new filing.

At least four of the nine justices must vote to approve a petition for it to advance to the oral argument stage.

The U.S. Department of Justice didn’t respond by publication time to a request by The Epoch Times for comment on Nielson’s filing.

Tom Ozimek contributed to this report.