GP: Tired student

Getty Images | SDI Productions

A federal appeals court on Monday issued a nationwide injunction temporarily barring the Biden administration’s student loan debt relief program.

The decision by the St. Louis 8th Circuit Court of Appeals is the latest in a series of legal challenges to President Joe Biden’s plan to forgive up to $20,000 in student debt for millions of Americans. The Biden administration stopped accepting relief claims on Friday after a federal district judge in Texas struck down its plan Thursday night, calling it “unconstitutional.”

Monday’s appeals court ruling came after six GOP-led states argued in a lawsuit that the loan relief program threatened their future tax revenues and that the plan circumvented the authority of Congress.

“The injunction will remain in effect until further notice of this court or the Supreme Court of the United States,” a three-judge appeals court panel said in its decision.

The injunction will put the program on hold pending an appeal of a lower court ruling that allowed the debt relief program to go ahead. The Biden administration could ask the Supreme Court to lift the injunction.

“We are confident in our legal authority for the student debt relief program and believe it is necessary to help the most needy borrowers as they recover from the pandemic,” said Karine Jean-Pierre , White House press secretary. “The administration will continue to fight these baseless lawsuits brought by Republican officials and special interests and will never stop fighting to support American workers and middle classes.”

Decision focuses on potential harm to state revenue

A federal judge initially dismissed the challenge brought by the six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — saying that if they raise “substantial and significant challenges to the debt relief plan,” they ultimately lacked the legal capacity to pursue the case.

The main hurdle for those hoping to take legal action against Biden’s plan has been finding a plaintiff who can prove they were wronged by the policy. “Such an injury is necessary to establish what the courts call ‘standing,'” said Harvard law professor Laurence Tribe.

The appeals court said Missouri demonstrated probable harm in fact from the program, pointing out that a major state-headquartered loan servicer, the Missouri Higher Education Loan Authority, or MOHELA, would lose revenue under the plan. The Missouri State Treasury Department receives money from MOHELA.

“And since at least one part likely has status, we don’t need to address the status of the other states,” the panel concluded.

Learn more about personal finance:
3 steps to follow if you have been laid off
Tips to Help Families Pay Their Monthly Expenses in a Time of Inflation
How to use pay transparency to negotiate a better salary

Biden’s plan would forgive up to $20,000 in federal student debt for borrowers who received a Pell Grant, which is a type of assistance available to low-income families. Borrowers who do not benefit from such a subsidy are entitled to relief of up to $10,000. More than 30 million people are expected to benefit from this plan.

“Whatever the outcome of this case, it will affect the finances of millions of Americans in student loan debt as well as Americans who pay taxes to fund the government and, indeed, all those affected by decisions taxes of such magnitude,” the panel said in its decision.

“As such, we are approaching the motion before us with great care.”

About The Author

Related Posts