A federal appeals court Friday is blocking President Biden’s student loan forgiveness program. The 8th Circuit Court of Appeals issued a temporary stay in response to an emergency motion brought by attorneys for several Republican-led states after a lower court ruled that their September lawsuit to stop the debt forgiveness program lacked standing.
In their appeal, the plaintiffs — which include Iowa, Kansas, Missouri, Nebraska, South Carolina and Arkansas — said the forgiveness program will irreparably harm their states’ student loan programs.
“Missouri is harmed from the financial losses that the cancellation inflicts,” the motion read.
They stay is not based on the merits, but allows for further briefings on the issue next week.
This also comes after the U.S. Supreme Court Thursday declined an emergency appeal by a group of Wisconsin taxpayers who had also challenged the plan in a separate lawsuit.
President Biden announced in August that his administration is canceling up to $20,000 in student loan debt for millions of Americans. Nearly 20 million people will be eligible to have their debt fully canceled under the new plan.
Borrowers who received Pell Grants, which are for low- and middle-income families, can get as much as $20,000 in debt forgiven, while other borrowers can get relief of up to $10,000.
Only individuals who earned less than $125,000 in 2020 or 2021 and married couples with total annual income below $250,000 are eligible for loan relief under the program.
Earlier this week, the U.S. Department of Education formally launched its debt relief application website. It’s unclear how Friday’s ruling will affect the site or the application process. However, White House press secretary Karine Jean-Pierre said in a statement Friday evening that the “temporary order does not prevent borrowers from applying for student debt relief.”
“It also does not prevent us from reviewing these applications and preparing them for transmission to loan servicers,” Jean-Pierre said. “It is also important to note that the order does not reverse the trial court’s dismissal of the case, or suggest that the case has merit. It merely prevents debt from being discharged until the court makes a decision.”
U.S. Education Secretary Miguel Cardona reiterated that sentiment in his own statement, saying: “today’s temporary decision does not stop the Biden Administration’s efforts to provide borrowers the opportunity to apply for debt relief, nor does it prevent us from reviewing the millions of applications we have received.”
— Robert Legare contributed reporting.