Biden’s Student Loan Program Blocked Nationwide by Federal Appeals Court in St. Louis
In another setback for the administration and the millions of borrowers who applied, on Nov. 14 a federal appeals court issued a nationwide injunction temporarily barring President Joe Biden’s student loan debt relief program.
“The injunction will remain in effect until further order of this court or the Supreme Court of the United States,” a three-judge panel of the U.S. Court of Appeals for the 8th Circuit said, according to the Nov. 14 ruling.
This decision follows the pause on debt relief, on Oct. 21, by the U.S. Court of Appeals for the 8th Circuit. The court is reviewing a lawsuit filed by six Republican-leaning states — Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina — as GOBankingRates previously reported.
“Whatever the eventual outcome of this case, it will affect the finances of millions of Americans with student loan debt as well as those Americans who pay taxes to finance the government and indeed everyone who is affected by such far-reaching fiscal decisions. As such, we approach the motion before us with great care,” the ruling read, in part.
The White House indicated last week that 26 million borrowers had already given the Department of Education the necessary information to be considered for debt relief, and that 16 million of them had already been approved.
CNBC reported that, “The injunction will put the program on hold pending an appeal of a lower court ruling that had allowed the debt relief program to go forward,” adding that the administration could ask the Supreme Court to lift the injunction.
Injunction Follows Texas Judge Ruling Against Biden’s Student Loan Forgiveness Program
This comes on the heels of a federal judge in Texas striking down the program on Nov. 10, saying that the law “does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program,” according to court documents.
Following the decision, Secretary of Education Miguel Cardona said the Biden administration believes the plan is lawful.
“We are disappointed in the decision of the Texas court to block loan relief moving forward. Amidst efforts to block our debt relief program, we are not standing down. The Department of Justice has appealed today’s decision on our behalf, and we will continue to keep borrowers informed about our efforts to deliver targeted relief,” Cardona said in a statement.
“Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders,” a notice on Studentaid.gov now reads.
Under the Biden plan, up to $10,000 in federal student debt relief may be offered to borrowers whose income in 2020 or 2021 was less than $125,000 (or $250,000 for households). That figure rises to up to $20,000 in student loan cancellation for Pell Grant recipients. If you are a dependent student, your eligibility is based on your parental income. Most federal loans are eligible.
As Business Insider noted: “At this point, it’s unclear what the timeline will be for borrowers moving forward.”
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