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Tags: student debt | joe biden | overreach

Student Loan Settlement Is 'Federal Overreach'

By    |   Thursday, 13 April 2023 04:12 PM EDT

Three universities that want the Supreme Court to halt an approved student loan relief settlement — arguing the Education Department exceeded its authority to cancel student debt — are getting back-up from 20 state attorneys general.

Led by Ohio Attorney General Dave Yost, 20 states have signed an amicus brief in support of the higher education institutions that claim Secretary of Education Miguel Cardona's most recent student debt cancellation plan is federal overreach.

"The executive branch does not have unlimited policymaking power, nor an unlimited bank account to forgive student loan debt," Yost said. "The executive branch cannot extend its authority as it sees fit."

Non-profit Everglades College, Inc., Lincoln Educational Services Corporation, and American National University are the institutions appealing the approved settlement, which stems from a class action lawsuit filed against the Department of Education, and requesting the stay on any loan forgiveness.

Under the terms of the settlement, the Education Dept. would forgive more than $6 billion in student loans taken out by more than 200,000 borrowers who attended upwards of 150 institutions — most of which are for profit.

Lawyers for the schools want the high court to decide whether the Higher Education Act of 1965 allows the education secretary "to cancel and refund federal student loans en masse and outside statutorily defined circumstances." The colleges also want the court to determine whether Cardona has the authority to provide student loan cancellation and refunds as part of a settlement.

Under the HEA, the secretary of education has the authority to "compromise, waive, or release any right, title, claim, lien, or demand" associated with federal student loans.

The appealing schools argue in court filings that HEA "in no way grants the limitless and unilateral power the secretary now claims."

"The secretary's claimed authority amounts to nothing less than the power to cancel, en masse, every student loan in the country," court documents state.

The settlement came out of the case Sweet v. Cardona, a long-running class action lawsuit. It was filed by plaintiffs who claimed their loan forgiveness applications, which took place through a federal program known as borrower defense to repayment, were being ignored or improperly denied.

Through the BDR process, the education department can cancel student loan debt for graduates who claim they were misled or defrauded by a university.

The plaintiffs alleged the Education Department ignored thousands of applications or issued arbitrary denials. Their request for relief spanned two presidential administrations and was finally resolved after a federal district court judge approved the settlement agreement in November 2022.

Before the payments could be dispersed, however, three schools named in the settlement attempted to stop it.

The colleges looking to appeal the settlement argue that by agreeing to the settlement, the Department of Education bypassed its statutory policy on BDR claims.

The protocol for a BDR claim involves the Education Department reviewing each claim, engaging in a fact-finding mission to determine possible guilt by a university, notifying the university of the claim, and providing the university an opportunity to dispute the claim.

Lawyers for the schools claim that the settlement violates the due process rights of the colleges because the claims were never fairly evaluated. They also contend that being listed as covered schools was unfair and damaging.

"ECI has not been provided its due process rights under the Department of Education's rules and has been stripped of the right to defend itself," Jesse Panuccio, a partner at Boies, Schiller, and Flexner representing Florida-based nonprofit Everglades College, Inc. told Newsmax.

In February, the same federal district judge who approved the settlement rejected the institutions' request to stop the department from paying out the settlement funds.

But the universities continued their attempt to stop the relief.

An appeal to the Ninth Circuit Court of Appeals was denied, however, which is why the universities filed an emergency application to the Supreme Court.

The schools' request for a stay was submitted to Justice Elena Kagan. She will decide whether to grant the request or allow the Biden administration to follow the settlement agreement.

This case is separate from the two legal challenges already being considered by the Supreme Court that deal with President Joe Biden's controversial one-time student loan debt relief plan.

The request for a stay in the case has the support of the 20 attorneys general, who have joined together to allege that Cardona didn't follow the traditional line of authority when granting debt forgiveness.

The amicus brief, argues that the Secretary of Education "seized immense power that Congress had never given him. This ill-gotten power enabled the secretary to pursue the mass forgiveness of student loans, a policy that his principal had long promised but not yet convinced Congress to authorize."

The brief also calls it "incorrect" for Cardona to argue that HEA "permits him to forgive and issue refunds with respect to all the student debt at issue here, and thus permits him to do what the settlement requires."

Joining Yost in the amicus brief were Republican attorneys general from Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Montana, North Dakota, South Carolina, Tennessee, Texas, Utah, West Virginia, and Wyoming.

Marisa Herman

Marisa Herman, a Newsmax senior reporter, focuses on major and investigative stories. A University of Florida graduate, she has more than a decade of experience as a reporter for newspapers, magazines, and websites.

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Three universities that want the Supreme Court to halt an approved student loan relief settlement — arguing the Education Department exceeded its authority to cancel student debt — are getting back-up from 20 state attorneys general.
student debt, joe biden, overreach
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2023-12-13
Thursday, 13 April 2023 04:12 PM
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