Joe Biden has spent much of his presidency attempting to cancel student debt for millions of Americans, but he has also seen stiff resistance from the courts. On Thursday, another court stepped up to oppose Biden’s plan, calling his latest attempt to cancel student debt “almost certainly unlawful.”
The 5th U.S. Circuit Court of Appeals in New Orleans overturned a lower court judge’s decision and directed him to issue a preliminary injunction blocking Biden’s debt relief plan nationwide, according to Reuters.
Writing for a three-judge panel, U.S. Circuit Judge Edith Jones said Career Colleges and Schools of Texas, which has been opposing Biden’s debt cancellation policy, would likely be able to prove in court that the U.S. Department of Education does not have the authority to under the Higher Education Act to cancel $430 billion in student loans for 43 million students.
Jones’ opinion comes in the case of Career Colleges and Schools of Texas v. United States Department of Education, et al, in the 5th U.S. Circuit Court of Appeals, No. 23-50491.
The rule being used to cancel the debt was finalized in Oct. of 2022, with changes that expanded the criteria for students to seek debt relief if their for-profit schools “misled” them.
Judge Jones added that the regulation suffers from a “pantheon of legal problems” and “numerous statutory and regulatory shortcomings.”
A spokesperson for the Department of Education claims that the new rules should stand the legal test. Reuters added that the spokesperson said the Higher Education Act clearly grants a path for borrowers to obtain relief when schools “ripped students off or greeted them in the morning with locked doors and a closure with no warning.”
One provision of the new rules is its “borrower-defense” provision that allows students to apply for debt cancellation if they feel their school gave them false promises.
Judge Jones said the provision allows borrowers to apply for forgiveness only after they have been sued for defaulting, not just “affirmative ‘claims’ that borrowers can assert against schools to avoid their obligations.”
The Biden administration had tried to focus the rule only on Career Colleges and Schools of Texas (CCST) loans, but Jones also demurred from that policy, saying that the focus is “incoherent in light of its use of the Rule to prescribe uniform federal standards.”
Biden has been working to cancel student debt since he came to office. Indeed, it was one of his main campaign promises, CNBC reported in 2020.
While he ignored that campaign promise for the first few years of his term, by 2023 he began a series of moves to fulfill that promise. Last December, he even bragged that he ignored the U.S. Supreme Court’s rulings barring his debt relief plans.
Whatever he did or didn’t do with the Supreme Court, Biden has been very busy passing rules to cancel student loan debt. In February he moved to cancel the student debt for 100,000 borrowers.
The move in February came after Biden’s announcement in October that he intended to cancel $9 billion in student debt.
The cancellation plans have come in for condemnation by a group of state attorney’s general led by Kansas AG Kris Kobach who object to Biden’s plans to shift debt from those who actually took out the loans to the American taxpayers.
Kobach blasted the debt cancellation plan as a political ploy just ahead of the 2024 elections, saying, “It may just be coincidence, or it may be that the administration is attempting to curry favor with people who have student debt.”
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