Biden’s student loan forgiveness plan halted as court weighs injunction

“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.”

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. The ruling by Autrey was one of two victories Thursday for the administration’s plan. Earlier, 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.

Judge dismisses GOP-led states’ lawsuit to block student-loan forgiveness plan

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.

Hours before the appellate court’s order, 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.

This is a developing story and will be updated.