The decision by the riders of the Eighth United States Appeals Circuit to freeze President Biden’s loan forgiveness plan on an emergency basis further clouds the prospects for the signature debt cancellation scheme and renders it more likely that it will wend its way to the Supreme Court.   

The appellate ruling granting an emergency injunction, which applies nationwide, comes on the heels of a ruling by a federal district court in Texas that labeled the plan “unconstitutional.” 

In response to these courtroom setbacks, the administration has halted processing applications to the program, which, absent legal challenge, was meant to already be up and running. Upward of 26 million Americans have already applied for relief.  

A panel of three riders — two appointees of President Trump, and one named by President George W. Bush — proclaimed that the “injunction will remain in effect until further order of this court or the Supreme Court of the United States.” 

The three jurists opined that “substantial questions of law” remain to be resolved and that the resolution “will affect the finances of millions of Americans.” The outcome is a victory for six Republican-led students who had spearheaded the challenge to the policy. 

That group earlier suffered a defeat at the district court level, though that judge acknowledged that their suit raised “important and significant challenges to the debt relief plan.” The sticking point was standing, or the threshold ability to show the kind of harm that courts can remedy. 

To secure the injunction, the states convinced the clutch of riders that the Missouri Higher Education Loan Authority, a quasi-state run enterprise known as Mohela, could be “an arm of the State of Missouri under the reasoning of our precedent,” and thus its losses due to the cancellation of debt contributed to the case for standing.

The riders went on to argue that even if Mohela was not an avatar of the state, the losses it would suffer in the event of cancellation would still redound to Missouri’s detriment, which could “prevent or delay Missouri from funding higher education at its public colleges and universities.”

That ida, even if it is only a probability, is enough to show a “likely injury in fact that is concrete and particularized, and which is actual or imminent, traceable to the challenged action of the Secretary, and redressable by a favorable decision.” In other words, to demonstrate standing.

Once Missouri demonstrated standing, it could pull its five fellow states along with it to secure an injunction that applies to all 50. The riders wrote that they could “discern no workable path in this emergency posture for narrowing the scope of relief,” meaning anything other than a nationwide freeze. 

Justice Amy Coney Barrett of the Supreme Court has already twice rejected emergency appeals — from Wisconsin and Indiana — to stop the loan forgiveness plan, which contemplates erasing up to $20,000 in loans per borrower. 

While those decisions were rendered without comment, in both cases lower courts failed to detect standing. That legal consensus now appears to be in doubt.