Student Loan Forgiveness Plan Blocked
October 27, 2022
A federal appeals court has temporarily blocked President Biden's student loan forgiveness program, halting the administration's ability to dole out up to $20,000 in relief to student borrowers.
The U.S. Court of Appeals for the 8th Circuit issued a stay on the program Friday after an appeal from six Republican attorneys general representing GOP-led states.
The ruling came the same week that the Department of Education officially launched the aid application website. And since then, almost 22 million borrowers had applied for forgiveness, Biden announced Friday.
The lawsuit from the six states is one of a few legal challenges against the plan.
But the Friday ruling does not bar all aspects of the plan from commencing.
Borrowers can still apply
White House press secretary Karine Jean-Pierre said in a statement after the ruling on Friday that the order does not stop eligible borrowers from applying for relief, nor does it prevent the government from reviewing applications and preparing them to be transmitted to loan servicers.
The only action that cannot occur while the stay is in place is the federal government officially forgiving the debt.
The stay stops the Biden administration from moving forward in granting the relief until the appeals court issues a ruling on the merits of the case.
"We will continue to move full speed ahead in our preparations in compliance with this order," Jean-Pierre said in the statement.
The plan would allow borrowers making less than $125,000 per year to have up to $10,000 in federal student debt forgiven. Borrowers who received Pell Grants would be able to have up to $20,000 forgiven.
What Republicans argue
The states argue in their original complaint that the Biden administration's plan is "economically unwise and downright unfair."
They argue that most debt cancellation will go to people in the top 60 percent of income distribution, since people who make lower incomes are less likely to have attended higher education.
The attorneys general state that no statute grants the Biden administration authority to relieve millions of people from paying back loans that they chose to take.
The president slammed Republicans Friday who have spoken against his relief efforts in remarks he gave at Delaware State University.
"Ted Cruz, the great senator from Texas, he said it's for slackers - quote slackers - who don't deserve relief. Who the hell do they think they are?" he said.
The administration has argued its authorization comes from the 2003 Higher Education Relief Opportunities for Students Act, which permits the secretary of Education to waive debt for borrowers in times of national emergency.
But the states argue that it is "inconceivable" that Congress intended to authorize across-the-board cancellation when it passed the act. They state that the act can only be invoked to support those negatively affected by a military operation or emergency, not for any reason.
Opponents to the plan have argued that the national emergency of the COVID-19 pandemic has ended, so that should not be a justification for the program.
Biden accused certain Republicans like Reps. Marjorie Taylor Greene (Ga.) and Vern Buchanan (Ga.) of hypocrisy for opposing relief for student debt but having received relief from small business loan payments during the COVID-19 pandemic.
A federal district judge ruled on Thursday that the six GOP-led states did not have standing to sue because they did not demonstrate that the policy directly harms them. The states appealed that decision to the appeals court, which granted a temporary stay until it hears the arguments of the case.
After the appeals court makes its ruling, either side could further appeal to the Supreme Court, which would then decide whether to intervene.
The Biden administration must file its response to the lawsuit to the appeals court by Monday, but the timeline for this case and other legal challenges to the plan is uncertain.
Timeline remains uncertain but officials encourage applicants
Payments on federal student loan debt are scheduled to resume at the start of next year after the Trump and Biden administrations have continually extended a pause since the start of the COVID-19 pandemic.
Biden promised that the extension of the federal student loan pause through Dec. 31 would be the last one when he simultaneously announced his debt relief plan.
Under the plan, borrowers can apply for forgiveness through next year, but the administration has encouraged people to apply by Nov. 15 if they want to ensure they can receive relief before the pause ends.
The hold, even if the plan is eventually able to go through, could play a key role in the political landscape with the midterm elections just more than two weeks away.
Younger voters are a key demographic for Democratic candidates and could be crucial to certain candidates in tight contests winning their races, which may decide the makeup of the House and Senate for the next two years.
The program being paused could poke a hole in a key platform point that many Democrats want to run on as the midterm cycle reaches the finish line.
But progressives are expressing confidence that Biden's plan is legal and will survive the challenges it is facing.
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DOJ charges 13 in cases targeting Chinese spy and influence campaignsSen. Elizabeth Warren (D-Mass.) said in a tweet on Friday after the ruling was made that Biden's authority on the issue is "clear," and she encouraged people to continue applying for relief.
Rep. Ayanna Pressley (D-Mass.) said she and Warren are traveling throughout the state next week to share information about the relief program.
The White House said in its statement that it will move "full speed ahead" with its preparations in the meantime.