Student loans

Biden’s student debt forgiveness plan temporarily suspended after Court of Appeals ruling

WASHINGTON — A federal appeals court on Friday temporarily barred the Biden administration from carrying out its student loan forgiveness plan, until the court rules on an injunction petition brought by six US-led states. Republicans, according to several media.

The 8th U.S. Circuit Court of Appeals is giving the Biden administration until Monday to respond, and those six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — will have until Tuesday to respond. The court said the order prohibited the administration from “discharging any student loan debt,” according to a copy of the document published by The New York Times.

Karine Jean-Pierre, President Joe Biden’s press secretary, said in a statement Friday evening: “Tonight’s temporary order does not prevent borrowers from seeking student debt relief from — and we encourage eligible borrowers to join the nearly 22 million Americans the Department of Education already has information about. It also does not preclude us from reviewing these requests and preparing them for transmission to loan servicers.

“It is also important to note that the order does not reverse the dismissal of the case by the trial court, nor does it suggest that the case has merit. It simply prevents the debt from being discharged until the court makes a decision.

“We will continue to move full speed ahead with our preparations in accordance with this order. And, the administration will continue to fight Republican officials who are suing to block our efforts to help working families.

Biden on Friday, during a speech at Delaware State University earlier Friday on student debt, said 22 million people had already applied for the program, for which applications were launched earlier this week. .

“Republican members of Congress and Republican governors are doing everything they can to deny this relief even to their — their own constituents,” Biden said, according to a White House transcript.

A federal judge previously rejected efforts by the six states to block the Biden administration’s plan to forgive up to $20,000 in individual federal student loans to more than 40 million people. The states immediately appealed.

The six Republican-led states sued the administration in federal court last month, arguing that the president had no authority in creating a loan forgiveness program without congressional approval.

On Thursday, U.S. District Judge Henry Autrey of the Eastern District of Missouri issued a 19-page ruling saying the states lacked standing to sue the administration over the program, despite the “substantial and significant challenges” that they raised in the case.

The lawsuit was filed on behalf of Iowa Governor Kim Reynolds, a Republican, and by the attorneys general of Nebraska, Arkansas, Missouri, South Carolina and Kansas.

The lawsuit is one of many legal challenges facing the loan forgiveness plan. Another such challenge, mounted by a conservative taxpayer advocacy group, suffered a setback on Thursday when US Supreme Court Justice Amy Coney Barrett refused to suspend the program pending resolution of related legal issues.

Under the Biden administration’s plan, student loan borrowers can get loan forgiveness of up to $10,000, while Pell grant recipients can apply for additional debt relief of $10,000. . The program aims to help borrowers who earn no more than $125,000 per year and couples who earn up to $250,000 per year.

The Biden administration’s defense of the program is based on a 19-year-old federal law that gives the Secretary of Education the power “to alleviate hardship that federal student loan recipients may experience due to national emergencies.” “. The administration argued in court that this was the same law the Trump administration used to suspend student loan payments at the start of the COVID-19 pandemic.

The states have argued that the financial implications of Biden’s $300 million plan are so significant that congressional approval is required. They also argued that the plan would deprive states of revenue that would otherwise flow to state-based student loan companies that now hold the debt.

They pointed out that some states do not consider discharged student loan debt as “income” that can be taxed, further depriving states of revenue.

During the pleadings, according to the Missouri IndependentBiden administration lawyers say the potential loss of tax revenue isn’t enough to give states standing in the case, especially since states are free to expand their definition of taxable income to include canceled student loan debt.

In his ruling, Justice Autrey appeared to agree, saying the “tiny nature of future income tax revenues” was not sufficient to establish harm to support the states’ claim that they had standing to bring their action.

Autrey had previously signaled that the states’ ability to bring the case was likely to be a factor in his decision.

“It’s hard to make a cake if you don’t have a mold to put that cake in” Autrey said during oral argument. “This pan is standing. It doesn’t matter if you have all the ingredients.

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