Just days after the Biden administration began accepting borrowers’ requests to forgive up to $20,000 in student loans, the student debt relief plan was halted.
According to Biden, nearly 22 million borrowers had submitted applications for the debt relief program. The Education Department estimates that nearly half of the more than 40 million Americans will qualify for some form of loan forgiveness. The borrowers earning less than $125,000 individually or $250,000 as a couple are offered up to $20,000 in debt relief under the program.
This week a federal appeals court has temporally halted the implementation of President Joe Biden’s student debt relief program, said Politico.
The 8th Circuit Court of Appeals halted the Biden administration from ‘discharging any student loan debt’ under its massive relief program. According to the court, it would hear the legal challenge from GOP states on an expedited basis.
In an effort to block the administration’s program from going into effect, officials in Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina filed a lawsuit in the appeals court last month.
As a result of the Biden administration’s action, the six states maintain that it goes beyond what Congress intended, and the law cited by administration officials fails to allow the cancellation of the debt. Upon the expiration of the repayment freeze in January, the government says debt relief will be needed to mitigate the risk faced by many federal student loan borrowers.
Despite the appeals court’s decision, White House press secretary Karine Jean-Pierre stressed that borrowers can still apply for loan forgiveness. She said, “It is also important to note that the order does not reverse the trial court’s dismissal of the case, or suggest that the case has merit. It merely prevents debt from being discharged until the court makes a decision. We will continue to move full speed ahead in our preparations in compliance with this order. And, the Administration will continue to fight Republican officials suing to block our efforts to provide relief to working families.”
She added, “Tonight’s temporary order does not prevent borrowers from applying for student debt relief at studentaid.gov – and we encourage eligible borrowers to join the nearly 22 million Americans whose information the Department of Education already has. It also does not prevent us from reviewing these applications and preparing them for transmission to loan servicers.”
The states have not outlined the kind of harm that would constitute a legal challenge in federal court, according to U.S. District Judge Henry Edward Autrey, who was appointed by George W. Bush. In a 19-page decision, Autrey wrote, “While Plaintiffs present important and significant challenges to the debt relief plan, the current Plaintiffs are unable to proceed to the resolution of these challenges.” In the statement, he emphasized that his decision was not a criticism of the debt relief plan, but a focus on the lack of standing of the states.
A group of Wisconsin taxpayers sought to stop Biden’s plan, but Supreme Court Justice Amy Coney Barrett rejected their request.