A federal appeals court on Friday evening blocked the imminent cancellation of federal student loans under President Biden’s debt relief program, days after millions of borrowers began applying for up to $20,000 in forgiveness.
“We are pleased the temporary stay has been granted,” Nebraska Attorney General Doug Peterson (R), one of the states’ officials who sued the administration, said in a statement. “It’s very important that the legal issues involving presidential power be analyzed by the court before transferring over $400 billion in debt to American taxpayers.”
Key details on Biden’s student loan forgiveness
- The Biden administration will extend a pause on student loan payments as legal fights have put the debt relief plan in limbo.
- Confused about the status of student loan forgiveness? Here’s what we know.
- Want to calculate your eligibility? See how much of your loan debt can be forgiven.
- In October, a federal appeals court blocked the imminent cancellation of federal student loans.
- President Biden’s plan will cancel some of the federal student debt held by millions of Americans.
- Borrowers can qualify for up to $10,000 in student loan forgiveness, and recipients of Pell Grants are eligible for an additional $10,000 in forgiveness.
The decision arrives a day after U.S. District Judge Henry E. Autrey, a George W. Bush appointee, dismissed the states’ lawsuit for lack of standing. Earlier Thursday, U.S. Supreme Court Justice Amy Coney Barrett denied a separate request by the Wisconsin Institute for Law and Liberty, working on behalf of a taxpayer’s association, to pause the program.
Biden’s loan relief plan would cancel up to $10,000 in federal student debt for borrowers who earn up to $125,000 annually, or up to $250,000 for married couples. Borrowers who received Pell Grants are eligible for an additional $10,000 in forgiveness. People have until the end of 2023 to apply, but the administration has encouraged borrowers to do so by Nov. 15 in hopes of it being processed before a pause on student loan payments ends Dec. 31.
White House press secretary Karine Jean-Pierre said in a statement that the appellate court’s order does not prevent people from applying for debt relief, and the administration encourages eligible borrowers to continue to do so. It also does not prevent the Education Department from reviewing applications, she said.
Jean-Pierre stressed that “the order does not reverse the trial court’s dismissal of the case, or suggest that the case has merit. We will continue to move full speed ahead in our preparations in compliance with this order.”
Hours earlier, Biden called the forgiveness policy a “game changer” during an appearance at Delaware State University.
“Our student loan plan lowers costs for Americans as they recover from the pandemic to give everybody a little more breathing room,” Biden said. “Republican members of Congress, Republican governors are doing everything they can to deny this relief. Their outrage is wrong and it’s hypocritical.”
Some 22 million people have applied for the program since a soft launch of the website a week ago, the president said Friday. Another 8 million people whose income information is already on file with the Education Department started receiving notifications this week that they are eligible for automatic debt relief.
Now those borrowers will have to wait for a conservative panel of judges on the 8th Circuit to decide the fate of the loan forgiveness program.
“Tens of millions of Americans have already rushed to apply for debt cancellation, an indication that borrowers are struggling, anxious and eager to see this burden lifted,” said Natalia Abrams, founder of the Student Debt Crisis Center, an advocacy group. “The President’s student debt cancellation plan is a bold solution to these challenges and frivolous lawsuits will not stand in the way.”
The Biden administration has maintained that its debt cancellation plan is legal, saying a 2003 law authorizes the secretary of education “to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies.”
The six states involved in the lawsuit — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — argue that the administration has no right to take action on this scale without congressional approval. They also say the policy would impose economic harm on state investment entities and student loan companies that own debt from the defunct Federal Family Education Loan program.
Student loan forgiveness
The latest: The Supreme Court will review the legality of President Biden’s debt relief plan, after another appeals court rejected a bid to revive it. To date, Biden’s student loan forgiveness plan is on ice after a Texas judge blocked the student debt relief plan.
Calculate your eligibility: We tackled everything you need to know about the debt relief plan. Use this calculator to see how much of your student loan debt can be forgiven. Here’s what to expect in the student loan forgiveness application.
The opponents: What is happening to student loan forgiveness? A federal appeals court temporarily halted the student debt relief program. Six Republican-led states are also suing to overturn President Biden’s student loan forgiveness plan. An Indiana lawsuit was the first significant legal action seeking to invalidate Biden’s policy.