Biden’s student loan forgiveness plan put on hold as court sides with GOP states

Topline

The Biden administration will remain blocked from dispersing student loan forgiveness to millions of borrowers, at least while litigation against its policy unfolds, as a federal appeals court ruled on Monday to continue to block the White House to move forward with the debt relief plan, siding with GOP-led states that sued to block it.

Highlights

The 8th Circuit Court of Appeals has blocked the Biden administration’s plan to cancel at least $10,000 in federal student loans for most borrowers nationwide, though the Biden administration has requested that any order against her be limited to the six states that sued: Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina.

The court ruled that the “universal suspension of student loan repayments and interest” by Education Secretary Miguel Cardona would hurt the Missouri Higher Education Loan Authority’s revenue and thus affect the ability of the State to fund public higher education.

The suspension will remain in place until further decision by this Court of Appeals or the Supreme Court.

The court had previously blocked the Biden administration from dispersing the loan relief on Friday, but only until it could hear from both sides and decide whether to issue a more lasting injunction ending the policy as it unfolds. as the litigation unfolds.

The Republican-led states argued the White House overstepped its authority in imposing the student loan forgiveness policy and told the appeals court that allowing borrower relief funds to be deployed “would irreparably harm to states by earmarking their tax revenues and state programs that service loans.

A district judge previously ruled against the states, finding they lacked standing to bring the case, and the Biden administration argued the order should stand, alleging the appeals court prevented the White House to contribute funds “would harm the public interest. ”

Surprising fact

The Biden administration stopped taking applications on Friday for the federal student loan forgiveness program after a Texas federal judge struck down the measure as “illegal.”

Key Context

The White House announced its sweeping plan to cancel student loans in August. Republicans have strongly decried the policy and legal experts cited by the Washington Post suggested that the States trial was probably the party’s best chance to successfully oppose the policy in court. The same day it was filed, the suit has already led the Biden administration to backtrack on part of its forgiveness plan involving federal loans held by private companies, after that suit specifically raised issues with those loans. Other plaintiffs challenging the student loan forgiveness have failed in court, with the Supreme Court rejecting a Wisconsin taxpayers’ request to block policy and the conservative Pacific Legal Foundation’s lawsuit against debt relief failing several times in court. (The group has appealed its case.)

Large number

22 million. That’s the number of Americans who took out student loan forgiveness in the first week applications became available, President Joe Biden said last month, more than half of the 43 million total borrowers eligible for relief. The program offers $10,000 in federal student loan debt relief for people earning less than $125,000 ($250,000 for a household) or $20,000 in debt for federal Pell Grant recipients.

To monitor

The White House has not yet clarified what the court’s decision means for student loan forgiveness, and whether borrowers will still be allowed to apply for the program even though the court has barred the dispersal of funds. The appeals court’s order is a temporary injunction while the litigation unfolds, so it’s still possible that a future court ruling will uphold the student debt policy and allow borrowers to receive their relief.

Further reading

Appeals court blocks Biden’s student loan forgiveness plan – for now (Forbes)

Biden’s student loan forgiveness gets green light as judge rules against GOP challenge (Forbes)

Biden says 22 million people have applied for student loan relief – more than half of the total considered eligible (Forbes)

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