President Biden’s student loan debt forgiveness program Monday dealt another blow to the court when a federal appeals panel imposed a preliminary injunction on a $400 billion plan affecting millions of borrowers.
The decision by a three-judge panel of the Eighth US Circuit Court of Appeals in St. Louis came four days after a federal judge in Texas ruled that Biden overstepped his executive authority in announcing the plan under the federal HEROES Act of 2003.
The Texas case was appealed and the Biden administration can now appeal the decision to the 8th Circuit as well.
Biden’s plan would cancel up to $10,000 in student loan debt for families earning less than $125,000 per year or less than $250,000 per year. Pell Grant recipients, who generally demonstrate greater financial need, will be forgiven loans of up to $20,000.
The cancellation applies to Parent PLUS loans as well as federal student loans used to attend undergraduate and graduate school.
On October 20, a federal judge allowed the program to proceed, but the Eighth Circuit blocked it the next day, while it considered an appeal by Nebraska, Missouri, Iowa, Kansas, Arkansas and South Carolina.
A significant part of the states’ argument centered around the financial harm loan cancellation would cause to the Missouri Higher Education Loan Authority, which services loans granted by the federal government to students across the country.
“This unexpected financial downturn will prevent or delay Missouri from funding higher education at its public colleges and universities,” the panel’s decision said, holding off until the issue is resolved in court, a process that could take several months.
,[T]He strongly supports the equity injunction given the Secretary’s irreversible effect [of Education] The action of loan forgiveness would be more of an injunction than the reduction of damages currently applicable,” the judges said. “Considerations include the fact that both the collection of student loan payments as well as the receipt of interest on student loans have been suspended. Is [through the end of this year],
The order was passed by US Circuit Judges Bobby E. Shepherd, Ralph R. Erikson and L. Released by Steven Graz. Shepherd was nominated to the bench by former President George W. Bush, while Eriksson and Graz were nominated by former President Donald Trump.
White House press secretary Karine Jean-Pierre said last week that 26 million people had applied for debt relief so far, while 16 million had already approved their relief.
After the order in the Texas case came down, he said the Department of Education would “expeditiously process his relief once it prevails in court”.
In that case, US District Judge Mark Pittman – another Trump appointee – said Biden did not have “explicit congressional authorization to create a $400 billion student loan forgiveness program.”
“In this country, we are not governed by an all-powerful executive with a pen and a phone. Instead, we are governed by a constitution that provides for three separate and independent branches of government,” Pittman wrote.
The legal challenges have created confusion about whether borrowers hoping to have their loans wiped out will have to resume making payments from January 1, when the moratorium is due to expire.
education department stopped accepting new applications for student loan forgiveness last week, saying it would stick to existing requests.
post with wires