By JIM SALTER – Associated Press
ST. LOUIS (AP) — President Joe Biden’s plan to forgive student loan debt for millions of borrowers suffered another legal loss Monday when a federal appeals court panel accepted a preliminary injunction halting the program while a call is in progress.
The decision by the three-judge panel of the 8th U.S. Circuit Court of Appeals in St. Louis came days after a Texas federal judge blocked the program, saying it usurped power from Congress. to legislate. The Texas case has been appealed, and the administration is likely to appeal the 8th Circuit’s decision as well.
The plan would forgive $10,000 of student loan debt for those earning less than $125,000 or households with incomes below $250,000. Pell Grant recipients, who typically demonstrate greater financial need, would get an additional $10,000 in debt forgiveness. Forgiveness applies to federal student loans used to attend undergraduate and graduate school, as well as Parent Plus loans.
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The Congressional Budget Office said the program would cost about $400 billion over the next three decades.
A federal judge on Oct. 20 allowed the program to continue, but the 8th Circuit temporarily suspended it the next day as it considered an effort by the states of Nebraska, Missouri, Iowa, Kansas, ‘Arkansas and South Carolina to block the loan. forgiveness plan.
The new ruling by the panel of three Republican appointees — one was nominated by President George W. Bush and two by President Donald Trump — extends the stay until the matter is resolved in court .
Part of the states argument centered on the financial harm that debt cancellation would cause the Missouri Higher Education Loan Authority.
“This unforeseen financial downturn will prevent or delay Missouri from funding higher education at its public colleges and universities,” the 8th Circuit’s decision said.
Nebraska Attorney General Doug Peterson, a Republican, said in a statement that the decision “recognizes that this attempt to forgive more than $400 billion in student loans threatens to cause serious harm to the economy that cannot be It is important to prevent the Biden administration from such an unlawful abuse of power.”
White House press secretary Karine Jean-Pierre said in a statement that the administration believes the program has legal authority and that “there is a need to help the most needy borrowers as they are recovering from the pandemic.”
“The administration will continue to fight these baseless lawsuits brought by Republican officials and special interests and will never stop fighting to support America’s working and middle class,” the statement added.
Both federal cases centered on the Higher Education Student Support Opportunities Act of 2003, commonly known as the HEROES Act. It was enacted after the September 11 terrorist attacks, allowing the Secretary of Education to waive or change the terms of federal loans in times of war or national emergency.
Administration lawyers argue that the COVID-19 pandemic has created a national emergency and student loan defaults have skyrocketed over the past 2 1/2 years.
But in Thursday’s Texas ruling, U.S. District Judge Mark Pittman — a Fort Worth-based Trump appointee — said the HEROES ACT failed to provide the clearance the Biden administration claimed it had.
Karine Jean-Pierre said that so far, 26 million people have applied for debt relief, and 16 million people have already had their relief approved. After the Texas decision, the administration stopped accepting applications.
“The courts have issued orders blocking our student debt relief program,” the Department of Education said on its federal student aid website. “As a result, at this time, we are not accepting applications. We are seeking to rescind these orders.
Legal challenges have sown confusion over whether borrowers who expected to have their debt forgiven will have to resume payments on Jan. 1, when a pause caused by the COVID-19 pandemic is set to expire.
Economists worry that many people have yet to bounce back financially from the pandemic, saying that if borrowers who expected debt cancellation were asked to make payments instead, many could fall behind on bills and default.
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