“…in this crappy economy that WE HAD NOTHING TO DO WITH” was left implied, but unspoken. I’m not sure that this is a winning strategy from the Department of Education, but they are sort of obligated to go for it, considering how mad everyone is. So they’re blaming COVID and asking for a stay of the order.

Student loan default rates could dramatically spike if the Biden administration’s loan forgiveness plan is blocked, a top official at the U.S. Department of Education said in a new court filing.

The warning came as the Department of Justice asked a federal judge in Texas to stay an order that has temporarily blocked the Biden administration’s debt relief program.

“Unless the [Education] Department is allowed to provide debt relief, we anticipate there could be an historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic,” Education Department Undersecretary James Kvaal said in the filing.

Now, I’m no legal scholar by any stretch, but I am not sure that loan delinquency rates are going to be any part of the judge’s deliberations as far as determining the legal fine points of the administration’s proposed action. “Is this constitutional or not/do they have the authority to implement this or not” are pretty finite questions, and the only ones under consideration. Last Thursday, “unlawful” was the word of the day.

…U.S. District Judge Mark Pittman, who was appointed by former President Donald Trump, declared the program “unlawful,” citing the 2002 Higher Education Relief Opportunities For Students Act (HEROES), which gives the Education Department the ability to grant waivers to financial aid recipients.

“This case involves the question of whether Congress — through the HEROES Act — gave the secretary [of Education] authority to implement a program that provides debt forgiveness to millions of student-loan borrowers, totaling over $400 billion,” Pittman wrote in his ruling. “And having interpreted the HEROES Act, the Court holds that it does not provide ‘clear congressional authorization’ for the program proposed by the secretary.”

This past Monday another judge – this time on the 8th Circuit Court of Appeals – weighed in on a lawsuit filed by six states, ruling that one of them, Missouri, did have standing to file. That court also issued an injunction.

…The ruling from the 8th Circuit Court of Appeals comes in response to a lawsuit jointly filed six Republican-led states that argued the Biden administration was overstepping its executive powers. The litigation also alleged that Missouri’s loan servicer would face a “number of ongoing financial harms” if the loans were forgiven and that the other states behind the suit would also see a disruption in revenue to their coffers.

… On Monday, the 8th Circuit ruled that at least one of the states, Missouri, had legal standing to challenge the Biden plan. The ruling noted that Missouri is likely to be harmed if the debt forgiveness plan moves forward because the Missouri Higher Education Loan Authority (MOHELA) would suffer a financial blow “if a substantial portion of its accounts are no longer active” due to the Biden plan.

That, in turn, would affect Missouri’s ability to fund higher education at its public colleges and universities, the ruling said.

The court said it considered issuing a limited injunction that would only halt the Biden plan in the six states that filed the lawsuit, but said that would be “impractical.” MOHELA, it noted, is one of the largest nonprofit student loan secondary markets in the U.S., servicing $168.1 billion in student loans.

“Given MOHELA’s national role in servicing accounts, we discern no workable path in this emergency posture for narrowing the scope of relief,” the court stated.

Burgeoning student loan defaults and delinquencies were already approaching comparisons to the 2008 mortgage crisis even before COVID hit, according to CNBC, so this state of affairs is nothing new, per se.

…Only about half of borrowers were in repayment in 2019, according to an estimate by higher education expert Mark Kantrowitz. About 25% — or more than 10 million people — were in delinquency or default, and the rest had applied for temporary relief for struggling borrowers, including deferments or forbearances.

But, interestingly enough, it has been exacerbated by Biden’s promises to forgive X amount of student loan debt, and the belief that would happen. I’m sure that was reinforced as soon as the sign-up page went live online and literally got its doors blown off. The applicant number is staggering.

…The court decisions on Thursday and Monday leave 26 million people who have applied to the debt-relief program in limbo. After Thursday’s ruling, the Biden administration stopped taking applications for its student debt forgiveness program.

Remember, too, that there were zero – count them – ZERO documentation requirements to apply. Not for income, not for eligibility, not for nothing. You only had to promise to produce documents, if requested, within a certain time frame. (I had to talk my Scottie out of signing up – caught her on the keyboard just before she hit send. That easy.)

So, bearing that in mind, is it any surprise that the default sob stories being used by DoE to appeal this ruling are folks who might have jumped the proverbial gun anticipating their pay-off? Gotten a little out over their skis?

…The borrowers most in jeopardy of defaulting are those for whom Biden’s student loan forgiveness plan would have wiped out their balance entirely, Kvaal said. The administration estimated its policy would do so for around 18 million people.

“These student loan borrowers had the reasonable expectation and belief that they would not have to make additional payments on their federal student loans,” Kvaal said. “This belief may well stop them from making payments even if the Department is prevented from effectuating debt relief.”

These borrowers have made no payments. And now, the DoE says, out of pique they may just say fuggedaboudit and not ever pay at all? What stellar citizens. The court should be concerned about them why?

…“Unless the Department is allowed to provide one-time student loan debt relief,” he went on, “we expect this group of borrowers to have higher loan default rates due to the ongoing confusion about what they owe.”

I’ll give you “ongoing confusion” about what someone owes – I am confused about why we owe them anything and why anyone would think we did.

Again, this is a half-hearted CYA effort on the most ridiculous grounds to defend what was clearly a pre-election, unconstitutional head fake to sucker in voters, many of whom weren’t planning on paying their legally incurred debts off in any event.

We don’t owe them anything.