Source: Hot Air
A late ruling yesterday in federal court delivered a setback for Pacific Legal Foundation in its lawsuit against Biden’s Academia bailout. However, the circumstances that prompted it may have delivered even more fodder for six states suing the Biden administration.
Let’s start with the first domino to fall. The Biden administration suddenly reversed course on providing comprehensive and compulsory student-loan debt forgiveness yesterday after seeing the PLF complaint. The Department of Education changed the rules to undercut Frank Garrison’s standing in the first lawsuit, and to head off part of the complaint filed later in the week by the six states:
In a remarkable reversal that will affect the fortunes of many student loan borrowers, the U.S. Department of Education has quietly changed its guidance around who qualifies for President Biden’s sweeping student debt relief plan.
At the center of the change are borrowers who took out federal student loans many years ago, both Perkins loans and Federal Family Education Loans. FFEL loans, issued and managed by private banks but guaranteed by the federal government, were once the mainstay of the federal student loan program until the FFEL program ended in 2010.
Today, according to federal data, more than 4 million borrowers still have commercially-held FFEL loans. Until Thursday, the department’s own website advised these borrowers that they could consolidate these loans into federal Direct Loans and thereby qualify for relief under Biden’s debt cancellation program.
On Thursday, though, the department quietly changed that language. The guidance now says, “As of Sept. 29, 2022, borrowers with federal student loans not held by ED cannot obtain one-time debt relief by consolidating those loans into Direct Loans.” …
Multiple legal experts tell NPR the reversal in policy was likely made out of concern that the private banks that manage old FFEL loans could potentially file lawsuits to stop the debt relief, arguing that Biden’s plan would cause them financial harm.
That is precisely the argument for standing in the state’s lawsuits. We’ll get back to that in a moment.
That change also eliminates 800,000 borrowers from the debt-forgiveness program, according to the Department of Education. That’s roughly 20% of its initial projected target relief population, so this is no minor change. Furthermore, the Biden administration has now added an opt-out for people that didn’t exist before, so that people like Garrison can choose not to accept the debt forgiveness and avoid the state-tax liabilities that would accrue.
There are no other reasons to adopt these last minute changes except to defeat the lawsuits filed just previous to them. It may have worked in the PLF lawsuit on Garrison’s behalf, at least temporarily. The judge in that case turned down a request for a temporary injunction and asked PLF to make a new argument for standing after the changes:
But the judge on Thursday denied the motion after the Department of Education updated its website to clarify no one would be forced to take part in the debt forgiveness, a clarification that came after the department cast the lawsuit as “baseless” for claiming they would.
“If you would like to opt out of debt relief for any reason, including because you are concerned about a state tax liability, you will be given an opportunity to opt out,” the department’s website reads after Wednesday’s update.
U.S. District Court Judge Richard Young ruled that the PLF attorney can no longer be irreparably harmed by the policy since he can now opt out, throwing out his motions for a temporary restraining order and preliminary injunction to halt Biden’s plan.
Young also granted PLF’s request to amend its complaint following the ruling.
The judge asked PLF to consider in its new filing if it has standing to file a lawsuit. He also noted that the Education Department’s plan is “still evolving” and asked PLF to consider if the case is ready to be adjudicated.
PLF plans to return with a new argument on standing, but they’re running out of time. The judge may well argue that the plan is “still evolving,” but it’s also supposed to be implemented as early as today or Monday.
The “evolving” issue may be a bigger problem in the state case. The rules change may undermine the standing there to some extent, but it bolsters the argument from the states over the Administrative Procedure Act (APA). That is supposed to prevent precisely these kinds of whimsical and arbitrary rule changes, especially at the last minute. Even if a federal judge may decide that their standing argument on the position of banks and loan servicers no longer applies, states have a reliance argument that makes their standing a little more significant in these kinds of challenges to federal policies. The very fact that Biden and his team are clearly making this policy up as they go along without bothering to go through APA-mandated rules change procedures will likely make the judge in their lawsuit think twice about dismissing the complaint over standing.
PLF and Garrison have an APA argument in their lawsuit as well. They may have an opportunity to appeal for an emergency injunction too, and hope that a higher court puts a halt to the hijinks and forces the Biden administration to follow the law. Stay tuned — this is far from over.
Update: These changes were so whimsical and arbitrary, Politico reports, that they blindsided progressives who demanded comprehensive debt forgiveness:
Sen. Elizabeth Warren (D-Mass.), who was one of the main champions of student loan forgiveness, said she was unaware of the change when asked by a reporter Thursday afternoon. “I don’t know what you’re talking about, so I can’t comment on it.” Many progressives in the House, too, were not alerted to the change.
Rep. Madeleine Dean (D-Pa.) said that she had just come from a White House roundtable about Pennsylvania, where the issue of student loan debt came up, but not the changes to the qualifications.
Reps. Ayanna Pressley (D-Mass.), Ilhan Omar (D-Minn.) and Mondaire Jones (D-N.Y.), along with Senate Majority Leader Chuck Schumer, had a press conference touting the rollout of the student loan forgiveness program as the news broke. Later, Congressional Progressive Caucus Chair Pramila Jayapal (D-Wash.) released a statement that subtly addressed the change in policy[.]
They’re now circling the wagons, but that just shows how legally fraught their demands were.