Federal Court of Appeals on Friday pause President Biden’s student debt relief plan has prevented the government from proceeding with debt forgiveness it said could begin as early as next week.
The U.S. Court of Appeals for the Eighth Circuit granted a stay of the lawsuit in response to appeals filed by six Republican-led states after a district court judge dismissed the case on Wednesday.
This action suspends the cancellation of the debt until the court can rule on the state government’s request for an injunction to forgive the debt. The court set a deadline for the government to file its response to the state’s filing on Monday, and a deadline for the state to respond on Tuesday.
White House spokeswoman Carine Jean-Pierre said late Friday that “this order does not reverse the trial court’s denial, nor does it suggest that the case has merit.” “It just prevents the debt from being discharged until the court makes a decision.”
She encouraged borrowers to continue applying at student aid.gov. did.
The suspension comes a day after Judge Henry E. Autry of the United States District Court in St. Louis dismissed the state’s claims.
“While plaintiffs present important and significant challenges to the debt relief plan, plaintiffs as of now cannot proceed to resolve those challenges,” wrote Judge Autry.
Under Biden’s plan, those earning less than $125,000 a year, or less than $250,000 per household, could write off $10,000 in federal student loan debt and receive Pell subsidies for low-income families. Some people write off $20,000.
In a speech at Delaware State University on Friday, Mr. Biden attacked a state lawsuit widely considered the most significant of the multiple legal challenges facing his plan. The Department of Education estimates the program will cost him $379 billion over his lifetime, which spans more than 30 years.
“Republican congressmen and governors are doing everything they can to deny this relief, even to their own voters,” Biden said.
In filings with the court late Thursday, the suing states told the Eighth Circuit that they reiterated their belief that their case “is likely to succeed on the merits,” adding, “This case raised a substantive or close question as to whether there is a position to pursue
Once the debt is canceled, “the state will not be able to remedy the full extent of any and all damages they are experiencing,” state attorneys said. Missouri, Arkansas, Iowa, Kansas, and South Carolina.
Biden invoked a 2003 federal law that allows the secretary of education to change financial assistance programs for students “in connection with war or other military operations, or national emergencies,” with debt forgiveness. established the program. The Biden administration claims the pandemic constitutes such an emergency.
Establishing standing — the ability to seek damages in court — has always been expected to be a major obstacle for opponents of Mr. Biden’s debt relief plan. standing.
The Biden administration has already scaled back plans to block legal challenges. In late September, the Department of Education indicated that some federal home education loans could no longer be consolidated into direct federal loans eligible for forgiveness. Hundreds of thousands of borrowers who thought they were may not be able to pay their debts.
This has caused disappointment among borrowers represented by debt relief groups such as Debt Collective.
A 2010 graduate of Ohio’s Wright State University, Matt Lennartz has $27,000 in loans and is currently $42,000 in debt.
“Generally speaking, I’m not frustrated at the moment financially,” said Lennartz, who said his wife’s loan was eligible for relief. “That’s utterly ridiculous.”
But for Delaware State University students — historically black schools — subject to bailout if Mr. Biden’s plan goes ahead, it will be a lifeline.
Zachary Barnard, the student who introduced Biden, said he took out a loan in 2019 to pay for his tuition and transportation. If Mr. Biden’s plan is carried out, he will graduate debt-free.
“This is breaking down barriers in our community and in our minds about what we can do in the future,” Bernard said, adding that he and his friends are excited to start the business. He added that he could now consider saving for his first home.