Federal judge considers whether to block Biden student loan handout

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A federal judge in Missouri will determine whether to temporarily block President Biden's student loan handout after attorneys representing the administration and several Republican-led states gave their arguments at a Wednesday hearing.

Missouri, Arkansas, Iowa, Kansas, Nebraska and South Carolina challenged the program, claiming that the Department of Education lacks the authority to cancel debt to this degree.

"What they’re trying to do is go around Congress, and this they can’t do," Nebraska Solicitor General James Campbell told U.S. District Judge Henry E. Autrey at the hearing.

Biden's plan calls for the federal government to cancel $10,000 in student loan debt – $20,000 for Pell grant recipients – for borrowers who earn up to $125,000 a year or married couples who make up to $250,000. The Congressional Budget Office has said the program will cost about $400 billion over the next three decades.

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The Justice Department is defending the program, arguing that it is supported by the HEROES Act, a 2003 law that allows the U.S. Secretary of Education to "waive or modify" provisions that apply to federal student loan programs in cases of national emergencies.

"COVID-19 is such an emergency," the DOJ argued in a court filing.

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An August memo from the DOJ's Office of Legal Counsel outlined this position, noting that the HEROES Act had been used to temporarily pause student loan payments and claiming the same authority allows the administration to reduce or cancel debt.

The Republican states claim the pandemic is no longer an emergency that qualifies under the HEROES Act, while DOJ attorney Brian Netter argued that the effects of the pandemic continue to be felt as student loan defaults have sharply increased since it began.

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Autrey held off on issuing an immediate ruling after both sides presented their views, and he did not say exactly when he would hand down his decision.

Earlier this week, the Job Creators Network Foundation Legal Action Fund brought a separate lawsuit against the program on behalf of two individuals in Texas federal court. That complaint alleges that the Department of Education "hammered out the critical details of the Program in secret and with an eye toward securing debt forgiveness in time for the November election" instead of following the notice-and-comment process that they argue is required by the Administrative Procedure Act.

The Associated Press contributed to this report.