In stark SCOTUS filing, DOJ challenges appeals court ruling against SAVE student loan plan
Solicitor General Prelogar was harsh and direct in her criticism of the Eighth Circuit's order.
On Tuesday, the Biden administration’s top lawyer at the U.S. Supreme Court did not only defend the administration’s latest student debt relief plan against another attack from Republican-led states — although she absolutely did that.
Going much further in Tuesday’s request, Solicitor General Elizabeth Prelogar challenged the appeals court that blocked the plan for now with unusually harsh language — questioning whether the U.S. Court of Appeals for the Eighth Circuit even understood the law and cases it was discussing, as well as the “universal” injunction it issued in the case.
On standing, the merits, and the extremely broad scope of relief — previously discussed at Law Dork — Prelogar repeatedly, directly, and starkly questioned whether the Eighth Circuit was doing law at all in its August 9 ruling.
“Even setting aside the Eighth Circuit’s errors on standing and the merits, its injunction is vastly overbroad in two ways,” she wrote in asking the court to vacate the August 9 injunction pending appeal that blocked the Education Department from implementing most of the Saving on a Valuable Education, or SAVE, program, as well as, potentially, going much further and limiting relief under the previously existing REPAYE plan that the SAVE plan modifies.
“[T]he Eighth Circuit entered a universal injunction barring the application of the REPAYE plan’s preexisting provision of forgiveness, as well as the rule’s major changes to the REPAYE plan, to millions of borrowers throughout the country — most of whom have no connection whatsoever to MOHELA,” Prelogar wrote, a reference to the Missouri loan servicer that the state has used to explain why it has standing to challenge federal student loan policies.
The SAVE plan, DOJ explained, has four primary parts expanding on past income-contingent repayment plans, most recently known as the REPAYE plan:
The “protected-income provision” does just that, protecting a certain amount of a person’s income from loan repayments. Under SAVE, that would be raised from 150% of the federal poverty line to 225% of the federal poverty line.
The “payment-calculation provision,” in turn, decreases the amount of discretionary income that can go to payments for undergraduate loans from 10% to 5%.
The “shortened-repayment-period provision“ limits the amount of time a person with smaller amounts of initial loans can be forced into repayment. If a person had $12,000 or less in initial loans, for example, outstanding loans would be forgiven after 10 years instead of the 20-25 years previously.
The “accrued-interest provision” limits how interest is charged for people making full payments under the plan.
DOJ is asking the Supreme Court to vacate the Eighth Circuit’s injunction pending appeal, which was issued for Judge Raymond Gruender, a George W. Bush appointee, and Judges Ralph Erickson and Steven Grasz, Trump appointees. In doing so, the administration is not challenging the existing district court injunction in the case, which blocks new loan forgiveness under the SAVE plan during the litigation — basically, the shortened-repayment-period provision. Although DOJ asserts that it will continue the defense of that part of the SAVE plan on appeal below, it uses that injunction in its favor before the Supreme Court by showing how untethered the Eighth Circuit’s August 9 ruling is to the rest of the plan.
A response has been requested, due by 4 p.m. August 19.
DOJ has already asked the court to deny a separate set of states’ request to put back in place a district court’s order blocking some of the SAVE plan. There, as discussed at Law Dork previously, the U.S. Court of Appeals for the Tenth Circuit issued a stay of the injunction pending appeal back in late June — allowing the SAVE plan to go forward during litigation.
Contrasted with the Tenth Circuit’s order, Prelogar wrote, “[T]he Eighth Circuit has now issued a conflicting injunction that upends the status quo and is inflicting serious harms on millions of Americans. If the Court does not vacate or narrow that extraordinary injunction pending further appellate review, this case would be one ‘of such imperative public importance’ as to justify an ‘immediate determination in this Court.’”
If the court does not vacate the Eighth Circuit’s injunction, in other words, DOJ urged the Supreme Court to take the cases on the merits and hear them in the fall to rule on the legality of the SAVE plan.
When lower courts are out of control, the Justice Department should say so — to hold the courts, including the Supreme Court, accountable and to inform the public. Prelogar’s request to the justices is a breath of fresh air in that respect.
Standing and the merits
In addition to the scope of the injunction pending appeal, the Justice Department strongly criticized the Eighth Circuit’s ruling on standing and on the likelihood that the states will succeed on the merits of their challenge.
After explaining that the Eighth Circuit’s held that Missouri has standing to bring this challenge because its standing argument “substantially similar to, if not identical to” the theory that the Supreme Court accepted in Biden v. Nebraska — Missouri’s challenge to the Biden administration’s loan forgiveness program under the HEROES Act — Prelogar countered that “the theory accepted in Nebraska simply does not apply here.”
Specifically, she noted — quite simply — that:
Missouri’s standing in Nebraska turned on a reduction in the number of loans that MOHELA would have serviced and thus the per-loan fees that MOHELA would have earned. But the rule’s protected-income, payment-calculation, and accrued-interest provisions will not reduce the number of loans MOHELA services. Those provisions affect only how much a borrower owes each month.
In a footnote, Prelogar added that MOHELA could theoretically save money itself under the SAVE plan:
Given this, she wrote that “the court’s grant of extraordinary universal relief based on a demonstrably inapplicable theory [of standing] is sufficient reason to vacate the injunction.”
On the merits, Prelogar all but questioned whether the Eighth Circuit read the underlying law, did question outright whether the Eighth Circuit understands what severability means, and challenged the appeals court’s use of the “major questions doctrine” in this case.
DOJ pushed back strongly at how the Eighth Circuit went beyond the initial lawsuit, something previously noted at Law Dork, when the appeals court blocked the Education Department from implementing loan forgiveness under the prior-existing REPAYE plan.
“Until this litigation, no court had ever questioned the Department’s ‘ability to forgive student loans through ICR plans,’” Prelogar wrote. “That is for good reason.“ The law regarding ICR plans sets out two things: the amount a borrower must repay each year is to be based on income and there is a time limit “not to exceed 25 years” for how long a person will need to repay loans. As such, she wrote, “The only understanding that makes sense of the statutory provisions governing ICR plans is that any outstanding balance is forgiven at the end of the specified period.”
Despite there being no basis “to question the statutory authority for the REPAYE plan’s preexisting provision of forgiveness,” Prelogar wrote, “the Eighth Circuit enjoined it all the same.“
More than that, she continued, “[T]he Eighth Circuit appeared to suggest that the Department acted improperly by continuing to forgive loans on the REPAYE plan’s longer timelines. … But it was the Eighth Circuit that misunderstood both the district court’s injunction and hornbook principles of severability.” (For non-lawyers, this was harsh. Prelogar asserting that the Eighth Circuit doesn’t understand hornbook law of severability is basically her saying, “A law student should know this.”)
Earlier, Prelogar had noted that “[t]he rule explains that its changes to the REPAYE plan are ‘distinct and significant improvements’ that had been ‘determined independently.” As such, she continued, the changes “are ‘independent and severable’ from each other and from the rest of the rule.”
In other words, all of the changes in the SAVE plan are justified on their own and blocking one of them, if a court did so, should have no effect on the rest of the plan. That’s exactly what happened at the district court, when U.S. District Judge John Ross, an Obama appointee, blocked the shortened-repayment-period provision’s loan forgiveness during the litigation. And it happened again when he denied the states’ request to block forgiveness based on the earlier REPAYE program during the litigation.
But when the Eighth Circuit blocked the other portions and other forgiveness, Prelogar wrote, it “made no effort to grapple with the district court’s severability analysis or rejection of the States’ request.”
In seeking to vacate the injunction against implementation of the three SAVE provisions covered by the Eighth Circuit’s order, DOJ devotes most of its time to explaining why the “major questions doctrine” doesn’t apply here to the protected-income and payment-calculation provisions.
“The authority to ‘determine[]’ the ‘appropriate portion of the [borrower’s] annual income’ for calculating payments, 20 U.S.C. 1087e(e)(4), is not some ‘unheralded’ or ‘newfound’ power,” Prelogar wrote. “Instead, it is the same power the Department has exercised time and again in fashioning ICR plans since Section 1087e’s enactment.”
In other words, how can simply changing the percentage of income protected from payments or percentage of discretionary income allowed to go to payments turn something into a “major question”? It can’t.
As Prelogar wrote:
Those changes fit squarely within the Secretary’s authority to “determine[]” the “appropriate portion of the [borrower’s] annual income” on which payments should be based. And the Eighth Circuit did not even purport to identify a textual reason to conclude otherwise.
As to the final SAVE plan change, Prelogar added a brief section that explained why the accrued-interest provision “falls comfortably within” the Education Department’s authority — while also noting yet another failing of the appeals court: “Despite enjoining the accrued-interest provision, the Eighth Circuit devoted no analysis to it.”
Universal injunctions have no place in our appellate system. Justices Gorsuch and Thomas are the loudest opponents of universal injunctions. It's good to see General Prelogar take this issue head on. I would have preferred it as a QP to a cert petition. But if this filing prompts the Court to finally address the issue, everyone in America wins.
Can't believe how the MOHELA suit still has legs...were they not a reluctant plaintiff in all this at the kick-off?