October, 2024
Washington — Student loan debt relief for good cause has once again been stymied by dubious court injunctions. The latest injunction raises eyebrows not only because it is the result of judge-shopping, but because the plaintiff, the State of Missouri, does not have the standing it claims to oppose the relief.
Although the U.S. Supreme Court in Biden v. Nebraska (2023) found, controversially, that Missouri's relationship to the loan servicer MOHELA was sufficient to give Missouri standing to oppose the first Biden debt relief proposal, that rationale does not attach to the much different debt relief effort now being promulgated by the Department of Education. For example, most of those now eligible for the relief are linked more closely to loan servicers' errors and consumer protection failures, and the legal basis for the relief is grounded in the Secretary of Education's longstanding powers and obligations under the Higher Education Act, not on the previous HEROES Act justification disallowed in Biden v. Nebraska.
The appropriate test for Missouri's standing in the current, much different case is whether Missouri is injured or if it actually benefits from the relief borrowers would be given. That is not going to be a close call, as the supposed injury to Missouri even in Biden was conjured out of nothing. And, clearly, the servicer MOHELA is not an arm of the State of Missouri, although both Missouri and MOHELA still make futile arguments in that direction.
That question was resolved earlier this year by the federal district court of Eastern Virginia in Pellegrino v. Equifax (2024): MOHELA is not an arm of the State of Missouri. If Missouri insists that it is, to have standing, then Missouri should pay borrower relief for MOHELA malfeasance. Missouri cannot have it both ways.
Judge-shopping is bad enough. Giving plaintiffs standing when they have none is worse. Many learned legal commentators, representing a broad ideological spectrum, have already doubted that Missouri had standing in Biden v. Nebraska. That was a contrivance to carve out the narrowest of paths for the Supreme Court to make pronouncements on its "major questions" doctrine. But this new attempt at debt relief is hardly a major question, if properly scored, as it deals primarily with fulfilling the promises the federal government made to borrowers over decades in its student loan programs. Granted, it is hard to find a plaintiff who will be harmed by the government finally fulfilling its own obligations, but Missouri is certainly not it.
