A federal appeals court has temporarily blocked the Biden administration from moving forward with its student debt relief program aiming to forgive billions of dollars in federal student loans.
The court action comes as six states argue that President Joe Biden has no grounds to cancel debt for millions of borrowers.
‘Their outrage is wrong’:Biden boosts student loan debt forgiveness on heels of court wins
The 8th Circuit Court of Appeals issued a stay prohibiting the administration from “discharging any student loan debt” under its loan forgiveness plan until it rules on an emergency request by six Republican states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina – as an attempt to block the policy.
“We are pleased the temporary stay has been granted,” Nebraska Attorney General Doug Peterson said in a statement. “It’s very important that the legal issues involving presidential power be analyzed by the court before transferring over $400 billion in debt to American taxpayers.”
The administration was prepared to start forgiving loans Sunday, according to court records. The plan, announced in August, would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, will get an additional $10,000 in debt forgiven.
White House Press Secretary Karine Jean-Pierre urged people to understand that the court 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.”
The temporary order does not prevent borrowers from applying for student debt relief at studentaid.gov. Jean-Pierre said eligible borrowers are encouraged “to join the nearly 22 million Americans whose information the Department of Education already has” and that the government is continuing to review applications and is preparing them for transmission to loan servicers.
“We will continue to move full speed ahead in our preparations in compliance with this order,” she said. “And, the Administration will continue to fight Republican officials suing to block our efforts to provide relief to working families.”
The appeal comes hours after a federal judge in Missouri dismissed the case. The judge ruled that the six states failed to establish standing, saying “the Court lacks jurisdiction to hear this case.”
The Supreme Court also shut down a separate legal challenge from a Wisconsin taxpayer group that argued that Biden overstepped.
The order also comes just as Biden announced that nearly 22 million people have applied for student loan debt relief in just one week since the federal government released its application for the plan. The president has criticized Republicans challenging his efforts in court.
“Who the hell do they think they are?” Biden said Friday during a speech in Dover, Delaware while addressing students at Delaware State University.
In his address, the president also singled out comments by Sen. Ted Cruz, R-Texas, who said student debt relief is for “slackers” who don’t deserve it.
In a statement Friday, NAACP President Derrick Johnson said student debt relief is essential.
“The very people blaming this administration for inflation are coming after the policies that will ease the pain of inflation on those most impacted,” Johnson said. “This is hypocritical. When we bail out billion-dollar corporations, it’s never an issue. But when it comes to lifting people who need the help most, including Pell Grant recipients—51% of which go to students whose families earn less than $20,000 a year—somehow it becomes an issue.”
Justice Department attorney Brian Netter said at an Oct. 12 hearing that fallout from the COVID-19 pandemic is still rippling and that student loan defaults have skyrocketed over the past two and a half years.
‘Windfall for the rich’:Republicans warm up attacks as Biden weighs forgiving student debt
Contributing: Maureen Groppe, Joey Garrison, and the Associated Press