Cases & Developments

Order Granting Plaintiffs’ Motion for Temporary Restraining Order. Plaintiffs, the States of Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma filed a motion for stay, preliminary injunction, and temporary restraining order (TRO) seeking emergency relief alleging that the Secretary of Education is unlawfully trying to mass cancel hundreds of billions of dollars in student loan debt. The court found that the Rule lacks statutory authority; the Rule has the potential to harm plaintiff states through financial injury; and such alleged financial harm is imminent and immediate. Therefore, the court temporarily restrained the Department from implementing the Third Mass Cancellation Rule, and restrained the Department from “canceling student loans, forgiving any principal or interest, not charging borrowers accrued interest, or further implementing any other actions under the Rule or instructing federal contractors to take such actions.” A hearing is set for September 18th, 2024.  

Order denying Defendant’s Application to Vacate Injunction. Plaintiffs, the States of Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma, sued the U.S. Department of Education, asserting that the Secretary’s 2023 Final Rule providing student debt relief, known as the SAVE plan, exceeded the Secretary’s authority under the Higher Education Act. The district court granted preliminary injunction limited to the ultimate forgiveness of loans, but it found the States had not shown irreparable harm with respect to provisions altering the threshold at which repayment is required and the nonaccrual of interest. The Eight Circuit granted an injunction pending appeal against use of the so called “hybrid rule” as an end run around the district’s injunction, finding the States likely to succeed on their claim that the SAVE plan is a violation of the major questions doctrine and ordered that “[t]he Government is, for any borrower whose loans are governed in whole or in part by the terms of the [SAVE plan], enjoined from any further forgiveness of principal or interest, from not charging borrowers accrued interest, and from further implementing SAVE’s payment-threshold provisions.” The U.S. Supreme Court denied the Government’s application to vacate the injunction pending appeal.   

Opinion granting-in-part and denying-in-part Plaintiffs’ Motion for Injunction Pending Appeal. Plaintiffs, the States of Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma, sued the Department of Education, asserting that the Secretary’s 2023 Final Rule providing student debt relief, known as the SAVE plan, exceeded the Secretary’s authority under the Higher Education Act. The district court granted preliminary injunction limited to the ultimate forgiveness of loans, but it found the States had not shown irreparable harm with respect to provisions altering the threshold at which repayment is required and the nonaccrual of interest. On cross-appeals to the Eighth Circuit, the States sought an expanded injunction, asserting that the Department had largely circumvented the injunction below by fashioning a “hybrid rule” from provisions of the SAVE plan that were not enjoined and provisions of the older REPAYE plan, which the SAVE plan was to replace. In granting the States’ motion, the Eight Circuit held the States were likely to succeed in their assertion that the SAVE plan is a violation of the major questions doctrine. It then ordered that “[t]he Government is, for any borrower whose loans are governed in whole or in part by the terms of the [SAVE plan], enjoined from any further forgiveness of principal or interest, from not charging borrowers accrued interest, and from further implementing SAVE’s payment-threshold provisions.”

U.S. Department of Education, Office of Federal Student Aid Electronic Announcement re: Draft FVT/GE Completers List Now Available. This Electronic Announcement notes that the Department has made the draft Financial Value Transparency and Gainful Employment (FVT/GE) Completers List available to schools. The list “identifies all relevant students who completed a GE and Eligible Non-GE program” for the relevant cohort periods. “Schools have a 60-day period to review and correct student information on the draft FVT/GE Completers List.” The correction period began Aug. 6, 2024, and closes on Oct. 5, 2024.