On Wednesday, a federal appeals court decided to reject the request of the Biden administration to reinstate the student loan debt relief program after it was ruled illegal by a lower district court in Texas. Biden’s student loan bailout will remain paused after the 5th U.S. Circuit Court of Appeals in New Orleans rejected Biden’s plea to put a stay on the program.
The Student Loan handout sought to forgive $10,000 in federal student loans for most borrowers and up to $20,000 for PELL grant recipients. It has been estimated this forgiveness would cost upwards of $400 billion that taxpayers would have to cover.
The original lawsuit in Texas came from a conservative organization, the Job Creators Network Foundation, who represented borrowers who did not qualify for loan forgiveness. U.S. District Judge Mark Pittman oversaw the case and sided with the conservative group.
Pittman condemned the student loan handouts and ruled them illegal. The Texas judge stated in his ruling:
“Whether the Program constitutes good public policy is not the role of this Court to determine. “Still, no one can plausibly deny that it is either one of the largest delegations of legislative power to the executive branch, or one of the largest exercises of legislative power without congressional authority in the history of the United States.”
“In this country, we are not ruled by an all-powerful executive with a pen and a phone. Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government … The Court is not blind to the current political division in our country. But it is fundamental to the survival of our Republic that the separation of powers as outlined in our Constitution be preserved. And having interpreted the HEROES Act, the Court holds that it does not provide ‘clear congressional authorization’ for the Program proposed by the Secretary.”
The three-judge panel in New Orleans chose not to override Pittman’s ruling. However, the court will expedite the case in the soonest available oral argument. The court does not contain appointees of Biden, casting doubt on the program’s chances.
There is also a separate legal challenge from six states led by Republicans. Missouri, Arkansas, South Carolina, Nebraska Iowa, and Kansas have argued that the student loan bailouts are unlawful and an abuse of executive power.
The states claimed:
“The Act requires a real connection to a national emergency. But the Department’s reliance on the COVID-19 pandemic is a pretext to mask the President’s true goal of fulfilling his campaign promise to erase student-loan debt.”
“Hiding the real motive, the agency attempts to connect the Cancellation to the pandemic by citing current economic conditions supposedly caused by COVID-19. But those conditions are not directly attributable to the pandemic, so the Department has failed to adequately link the Cancellation to a national emergency.”
Biden has called on the Supreme Court to step in and rule on the loan handouts, maintaining the legality of his executive authority to forgive the debt.
The program has sparked controversy around the country as some taxpayers feel it is not their obligation to cover the debt of others.
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