Appeals Court Blocks Biden’s Student Loan Cancellation Plan—For Now

Topline

The Biden Administration’s plan to forgive many Americans’ student loans was put on hold Friday after the 8th Circuit Court of Appeals granted a request from a group of Republican attorneys general to temporarily halt the program, just days before the first borrowers were expected to have loans canceled.

Key Facts

Student loan forgiveness was expected to begin for some borrowers as soon as Sunday.

The court ruled the administration cannot start forgiving loans until appellate judges make a decision on the plaintiffs’ request for an injunction—an expedited briefing on the matter is set to wrap up Tuesday.

Republican AGs from Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina brought the challenge, claiming President Joe Biden wrongfully bypassed getting congressional authorization for his plan and threatened states’ tax revenues by canceling loans.

A district court judge dismissed the challenge Thursday, stating “the Court lacks jurisdiction to hear this case,” but the AGs appealed.

The White House did not immediately respond to a request for comment from Forbes.

Key Background

The last-minute ruling is a major blow for the administration in the near-term but does not represent an opinion on the policy itself, and borrowers can continue filling out loan relief applications. Under Biden’s plan, which was first announced in August, federal student loan borrowers making under $125,000 a year are eligible for $10,000 in forgiveness—and those who received Pell Grants can claim $20,000 in debt relief. The White House has argued the debt cancellation program is legal since the Education Secretary has the power to modify student loans during times of national emergency, such as the Covid-19 pandemic.

Surprising Fact

The order from the appellate court was unsigned, but just one of the 14 active and senior judges on the 8th Circuit was appointed by a Democratic president.

Big Number

22 million. That’s how many borrowers applied for loan cancellation during the first week the relief application was online, Biden said Friday.

Tangent

The Supreme Court on Thursday rejected a similar request to block the program brought by a Wisconsin taxpayer’s group.

Further Reading

Biden Says 22 Million Have Applied For Student Loan Relief—More Than Half The Total Believed To Be Eligible (Forbes)

Supreme Court Will Not Block Biden’s Student Loan Forgiveness (Forbes)