The decision overrules a trial court ruling and likely paves the way for a decision on the merits striking down the program.
Earlier today, a three-judge panel of the US Court of Appeals for the Eighth Circuit unanimously concluded that at least some of the six states challenging the legality of President Biden’s plan to forgive some $400 billion in student loan debt have standing to challenge the program. This decision reversed a badly flawed district court ruling going the other way. In my post criticizing the lower court decision, I said that « it is likely that the US Court of Appeals for the Eighth Circuit will overturn this decision. » They have now done exactly that. Here is the key part of today’s ruling:
This case centers on the plaintiff States’ request to preliminarily enjoin the United States Secretary of Education (« Secretary ») from implementing a plan to discharge student loan debt under the Higher Education Relief Opportunities for Students Act of 2003…
Key to the district court’s rationale was its conclusion that the State of Missouri could not rely on any harm the Missouri Higher Education Loan Authority (« MOHELA ») might suffer on account of the Secretary’s cancellation of debt. The States appealed and moved for a preliminary injunction pending appeal….
The district court’s analysis began and ended with standing….We begin by examining the standing of the State of Missouri and, like the district court, focus on MOHELA. MOHELA’s unique mix of legal attributes and authority have led to differing opinions as to whether it is an « arm of the state » of Missouri for purposes of being entitled to sovereign immunity. The core issue before this court, however, is whether the alleged harm from the Secretary’s debt discharge plan, considering the role of MOHELA, is sufficient to meet the requirements for Article III standing for Missouri.
The relationship between MOHELA and the State of Missouri is relevant to the standing analysis. MOHELA was created by the General Assembly of Missouri. See Mo. Rev. Stat. § 173.360. It is governed by a seven-member board composed of five members appointed by the Governor of Missouri, as well as the Missouri State Commissioner of Higher Education and a member of the Missouri State Coordinating Board of Higher Education. Id. After its creation, the Missouri General Assembly expanded MOHELA’s purpose to include « support[ing] the efforts of public colleges and universities to create and fund capital projects. » Id. Relatedly, the General Assembly established the Lewis and Clark Discovery Fund (« LCD Fund ») from which the General Assembly may annually appropriate moneys for certain purposes, including « funding of capital projects at public colleges and universities. » Id. § 173.392. Most significantly, Missouri law, id. § 173.385.2, specifically directs MOHELA to distribute $350 million « into a fund in the State Treasury » for this program…..
Given this statutory framework, MOHELA may well be an arm of the State of Missouri under the reasoning of our precedent. See Pub. Sch. Ret. Sys. of Mo. v. St. Bank & Trust Co., 640 F.3d 821, 826–27, 833 (8th Cir. 2011) (applying the test to determine whether sovereign immunity applies and holding Missouri public school employment retirement systems were arms of the state). In fact, a number of district courts have concluded that MOHELA is an arm of the state…..
But even if MOHELA is not an arm of the State of Missouri, the financial impact on MOHELA due to the Secretary’s debt discharge threatens to independently impact Missouri through the LCD Fund.
