6th Circuit affirms district court’s decision to discard case for lack of standing

Courts Student Loans Appellate Department of Education

On May 17, the U.S. Court of Appeals for the Sixth Circuit affirmed a lower court’s sua sponte dismissal for lack of subject-matter jurisdiction. This case was brought by two nonprofit organizations seeking to halt the Department of Education’s (DOE) plan to provide participants in the Public Service Loan Forgiveness (PSLF) program with a one-time account adjustment that would allow time spent in excessive forbearance status to count toward debt forgiveness under the program, as announced in April 2022 and July 2023. Plaintiffs alleged standing on the basis that they “have previously employed, and currently employ, borrowers who participate, may become eligible to participate, or have previously participated in the statutory PSLF program” and “expect to recruit other such employees in the future.” Notably, and not long after filing their complaint in the lower court, plaintiffs filed an ex parte motion for a temporary restraining order and preliminary injunction, seeking to prevent the Department of Education from discharging any debt through the long-term forbearance aspect of the adjustment. Before defendants could respond, however, the U.S. District Court for the Eastern District of Michigan dismissed plaintiffs’ complaint sua sponte without prejudice. 

On appeal, plaintiffs argued that they were not required to link the proposed adjustment to a specific tangible loss and that the adjustment injured them by reducing their expected benefits under a loan forgiveness program. The Sixth Circuit disagreed. It found plaintiffs failed to allege standing due to an injury resulting “from the [student loan] adjustment based on competitor standing and deprivation of a procedural right” and affirmed the dismissal for lack of subject-matter jurisdiction.