Another court blocks Biden’s plan to forgive student loans

More than 26 million applied for debt relief

- Chris Quintana and Joey Garrison

A federal appeals court blocked President Joe Biden’s student loan forgivenes­s program, further crushing the hopes of more than 26 million Americans who have applied for the relief, discouragi­ng millions more who were eligible for the boost and potentiall­y killing the president’s signature program.

The 8th Circuit Court of Appeals granted an injunction sought by six Republican-led states that argued Biden exceeded his presidenti­al authority when he cited COVID-19 as a national emergency to cancel student loan debt for millions of borrowers. The states also said they would lose out on future tax revenue under Biden’s plan.

It’s the second decision by a federal court blocking the program in a matter of days. A U.S. District Court in Texas blocked the program Thursday in a different case.

There is a chance the program could be revived: The administra­tion can appeal the decision to the Supreme Court, though it’s unclear how the court’s conservati­ve majority would rule.

The appeals court reversed a lower federal court’s decision that ruled the six plaintiff states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina – failed to establish standing to bring the challenge.

Can I still apply for the president’s student debt forgivenes­s plan?

The appeals court ordered a temporary halt of the rollout of Biden’s debt forgivenes­s plan until a final decision. The White House urged student loan borrowers to apply for relief even amid the uncertaint­y.

The Education Department has since stopped taking applicatio­ns following the outcome of the Texas case.

Biden signed an executive order in August to grant the debt forgivenes­s, fulfilling a campaign promise sought by young voters and progressiv­es.

Biden created the debt relief plan under the HEROES Act, which was passed after 9/11 sparked an Americanle­d military campaign against terrorism. The act gave the administra­tion authority to forgive student loan debt in associatio­n with military operations or national emergencie­s. The White House cited the COVID-19 pandemic as the national emergency.

Under the president’s plan, borrowers would be eligible for up to $10,000 or $20,000 in debt relief, depending on their income and whether they received a Pell Grant in college.

What the court said

The states questioned that authority and argued they would lose money from future tax revenue and via quasistate agencies that service student loans.

The 8th Circuit specifical­ly upheld the states’ legal standing. The district judge in the case had previously dismissed the case on those grounds, and legal critics said proving standing would be the biggest hurdle for those looking to block the president’s debt relief plan

The judges agreed with the states’ argument that the quasi-state student loan servicer, MOHELA, would suffer as a result of the president’s plan to forgive billions in debt, and that that would affect the state of Missouri.

“This unanticipa­ted financial downturn will prevent or delay Missouri from funding higher education at its public colleges and universiti­es,” the judges wrote.

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