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Supreme Court decision stopping student loan forgiveness hinged on Missouri company

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(The Center Square) – A Missouri student loan servicing company played a pivotal role in the U.S. Supreme Court’s ruling on Friday against President Joe Biden’s plan to forgive billions in student loan debt.

In a 6-3 decision, the court ruled the Biden administration couldn’t forgive up to $20,000 in individual student loan debt for approximately 40 million Americans. Chief Justice John Roberts, in the majority opinion, and Justice Elena Kagan, in dissent, both mentioned Missouri’s legal standing as essential to their votes.

Before he was elected to the U.S. Senate, former Republican Missouri Attorney General Eric Schmitt joined five states in a lawsuit to stop the Biden administration from cancelling $430 billion in student loans. All states but Missouri were dismissed from the suit in the lower courts because they lacked standing.

Missouri was determined to have standing by the Eighth Circuit Court of Appeals. It found the Missouri Higher Education Loan Authority, an independent company created by state law, and the state would be negatively impacted by the forgiveness of student loans by Biden’s secretary of education.

“The Secretary’s plan harms MOHELA in the performance of its public function and so directly harms the State that created and controls MOHELA,” Roberts wrote. “Missouri thus has suffered an injury in fact sufficient to give it standing to challenge the Secretary’s plan.”

Kagan criticized the notion that Missouri had standing through MOHELA and noted the company wasn’t a part of the suit and didn’t cooperate with the attorney general, forcing his office to file freedom of information requests for documents.

“It still contravenes a bedrock principle of standing law – that a plaintiff cannot ride on someone else’s injury,” Kagan wrote. “Missouri is doing just that in relying on injuries to the Missouri Higher Education Loan Authority, a legally and financially independent public corporation. And that means the Court, by deciding this case, exercises authority it does not have. It violates the Constitution.”

Kagan also disagreed the state would suffer financial harm from the loan forgiveness as the company’s financial operations are independent from the state.

“Indeed, before this case, Missouri had never tried to appear in court on MOHELA’s behalf,” Kagan wrote. “That is no surprise. In the statutory scheme, independence is everywhere: State law created MOHELA, but in so doing set it apart.”

Schmitt, current Attorney General Andrew Bailey, and other Missouri elected officials praised the ruling.

“Today’s decision confirmed what my colleagues and government officials on both sides of the aisle have been saying all along: the President does not have the authority to simply forgive debt owed to the taxpayers without authorization from Congress,” U.S. Rep. Blaine Luetkemeyer, a Republican representing Missouri’s 3rd Congressional District, posted on social media. “… the Administration’s action was never about education or helping Americans. It was a stunt to appease a specific liberal voting block before the 2022 election. Now, the Americans who believed the President and stopped their loan payments are years behind, and will restart their payments at a time when the cost of everything else is near an all-time high thanks to Democrats’ disastrous fiscal policy.”

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