Eighth Circuit Halts Education Debt Forgiveness Program Pending Appeal

Steven D. Schwinn, University of Illinois Chicago School of Law

The Eighth Circuit granted a motion to stop the Biden Administration from implementing its student-debt forgiveness program pending appeal. The court just a few weeks ago granted an emergency motion for an administrative stay, to the same effect.

The ruling halts implementation of the program nationwide during the state's appeal. It's another setback for the loan-forgiveness program in the courts.

The court said, contrary to the district court, that the Missouri Higher Education Loan Authority had standing as a state agency, or, if not, because of "MOHELA's financial obligations to the State treasury, the challenged student loan debt cancellation presents a threatened financial harm to the State of Missouri." Moreover, "the equities strongly favor an injunction considering the irreversible impact the Secretary's debt forgiveness action would have as compared to the lack of harm an injunction would presently impose."

The court said that it couldn't limit an injunction to the plaintiff states, however, because MOHELA services loans nationwide, and because "tailoring an injunction to address the alleged harms to the remaining States would entail delving into complex issues and contested facts that would make any limits uncertain in their application and effectiveness."