A federal appeals court is set to rule this week whether the Illinois judiciary is properly handling a case involving students’ student debt.
The court will decide whether the Judicial Economy Institute and the Illinois Educational Assistance Corporation (IEAC) are properly accountable for the debts of about 200 students who have been charged by the state and the US Department of Education for unpaid debt.
The cases are part of a wider battle over how colleges and universities should handle student debt, which has prompted lawmakers in states such as New York and California to introduce legislation to reform how states deal with student debt that can lead to serious financial hardship.
Justice Elena Kagan, who has been appointed to the court by President Donald Trump, will rule by March 1 whether the cases are covered by her previous ruling in February.
As a federal appeals judge, Kagan will have the power to decide whether to hear the cases on behalf of the states.
But the state of Illinois would need to demonstrate that it has shown “substantial injury” to the state, which could take the form of loss of business, tax revenue or financial hardship, if the cases reach the court.
Kagan said she would likely decide in favor of the state.
In her decision last month, she said the IEA and the EDAC were responsible for students’ debts, not the state or the US government.
The cases stem from a 2009 case in which the state tried to force students to pay off $200,000 in debt by charging them interest on student loans that they did not qualify for.
IEA lawyers argued that the interest was due to the fact that students who borrowed money were not in school, meaning the interest should have been paid off as soon as they graduated from high school.
Instead, students were told that they owed interest, and the case was thrown out of court.