An appeals court decision issued on Monday prohibits qualified borrowers from being forgiven up to $20,000 in debt.
President Joe Biden’s expansive debt forgiveness program is indefinitely suspended by a federal appeals court, so the United States cannot discharge any student loans under it.
Until the 8th U.S. Circuit Court of Appeals in St. Louis has had a chance to review a request from six Republican-led states to resurrect their legal challenge to the plan, Monday’s decision prevents qualified borrowers nationwide from having up to $20,000 of debt forgiven. On October 20, a district court judge dismissed the state’s lawsuit.
The appeals panel claimed that the debt forgiveness’s effects would be permanent in contrast to the lack of harm brought on by an extension of the injunction. The plan’s implementation has been put on hold since the appeals court issued an emergency stay on October 21.
The appeals court decision is yet another setback for the Biden administration’s plan, which has been plagued by legal challenges from conservative groups since its inception. In a separate lawsuit, a federal judge in Texas declared the debt forgiveness plan unconstitutional, prompting the US Department of Education to temporarily halt accepting loan forgiveness applications.
According to the program, which allows qualified borrowers who earn less than $125,000 annually, or $250,000 for households, to have up to $20,000 in debt forgiven, approximately 26 million people have already submitted applications.
In a lawsuit filed in September to stop the plan, Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina claimed that it posed a financial risk to each state due to the loss of tax revenue.
The Biden administration defended the program as legal, arguing in court documents submitted to the 8th Circuit that if it had to be suspended, the debt relief should only apply to borrowers in the six states named in the lawsuit. Limiting the injunction to the named states would “be impractical and would fail to provide complete relief,” the court stated in its decision on Monday.
Nebraska v. Biden, 8th US Circuit Court of Appeals, Case No. 22-3179
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