Federal court puts halt to Biden’s student debt transfer
ST. LOUIS (AP) — President Joe Biden’s plan to make taxpayers responsible for hundreds of billions of dollars in student loan debt was handed another legal loss Monday when a federal appeals court panel agreed to a preliminary injunction halting the program while an appeal plays out.
The ruling by the threejudge panel from the 8th U.S. Circuit Court of Appeals in St. Louis came days after a federal judge in Texas blocked the program, saying it usurped Congress’ power to make laws. The Texas case was appealed and the administration is likely to appeal the 8th Circuit ruling as well.
The plan would make taxpayers pay $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income.
Pell Grant recipients would get an additional $10,000 from taxpayers. The transfer applies to federal student loans used to attend undergraduate and
graduate school, along with Parent Plus loans.
The Congressional Budget Office has said the program will cost at least $400 billion.
A federal judge on Oct. 20 allowed the program to proceed, but the 8th Circuit the next day temporarily put it on hold while it considered an effort by the states of Nebraska, Missouri, Iowa, Kansas, Ar
kansas and South Carolina to block the loan forgiveness plan.
The new ruling from the panel extends the hold until the issue is resolved in court.
Part of the states’ argument centered around the financial harm the debt transfer would cause the Missouri Higher Education Loan Authority.
“This unanticipated financial downturn will prevent or delay Missouri from funding higher edu
cation at its public colleges and universities,” the 8th Circuit ruling stated.
Nebraska Attorney General Doug Peterson, a Republican, said in a statement that the ruling “recognizes that this attempt to forgive over $400 billion in student loans threatens serious harm to the economy that cannot be undone. It is important to stop the Biden administration from such unlawful abuse of power.”
Both federal cases centered around the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act. It was enacted after the 9/11 terrorist attacks, allowing the secretary of education to waive or modify terms of federal loans in times of war or national emergency.
Lawyers for the administration contend the COVID-19 pandemic created a national emergency.
But in the Texas ruling on Thursday, U.S. District Judge Mark Pittman — an appointee of Trump based in Fort Worth — said the HEROES ACT did not provide the authorization that the Biden administration claimed it did.
The legal challenges have created confusion about whether borrowers who expected to have debt canceled will have to resume making payments come Jan. 1, when a pause prompted by the COVID-19 pandemic is set to expire.