After a series of court victories this week, a federal appeals court has temporarily blocked Biden’s student loan forgiveness plan.
Biden’s Student Loan Forgiveness Plan — How It Works
Biden’s plan to cancel student loans Forgives up to $20,000 in student loan debt For up to 40 million borrowers.To be eligible, borrowers must have Earned less than $125,000 (or less than $250,000 if married) in 2020 or 2021.
Continue Sudden change in eligibility rules Government-held federal only, subject to legal challenge student loan Eligible for student loan forgiveness. Commercially held FFELP loans, which were originally potentially eligible if consolidated, are no longer eligible after September 29.
Court temporarily blocks Biden’s student loan forgiveness plan
The Eighth Circuit Court of Appeals on Friday temporarily blocked Biden’s student loan forgiveness plan.
“Appellant’s urgent motion for an administrative stay barring the discharge of student loan debt under the Cancellation Program until appellant’s motion for an injunction pending appeal is granted.” The court said in a short order.
The lawsuit involved a Republican-led coalition of states that filed a lawsuit in Missouri federal district court to try to block Biden from implementing his student loan forgiveness program. The lawsuit alleges that the state, as well as related FFELP lenders and servicers (including MOHELA, now a major player in the student loan space), will suffer financially as a result of the debt forgiveness scheme. A judge dismissed the case, but the Union of States appealed to the Eighth Circuit Court of Appeal, seeking emergency stay. The Court of Appeal granted the suspension and considered it an “administrative suspension.”
What the court ruling means for borrowers seeking student loan forgiveness
The Eighth Circuit’s ruling is temporary and will apply only for a short period of time while the court considers the state’s request for a preliminary injunction. A briefing on the matter is expected next week, according to the court.
The temporary order may not indicate the court’s view of Biden’s student loan forgiveness plan, but it’s too early to say what the court’s final position will be. The government had planned to begin waiving student loans under the initiative as early as October 23, according to documents. But that timeline was effectively frozen as no injunction briefing took place until October 25th.
The next step is for an appeals court to decide whether to impose the preliminary injunction requested by the Republican-led coalition of states. If the court decides against the injunction, it could go ahead with implementing Biden’s student loan forgiveness plan. However, if a court issues an injunction, the Loan Forgiveness Program will remain blocked while legal proceedings continue. This could cast doubt on the initiative’s future.
Are Student Loan Forgiveness Applications Still Available?
of Online application Student loan forgiveness is still valid and borrowers can still apply. At the time of this writing, the Department of Education has not shut down the application portal.
The administrator may collect your application during your stay. However, the Department of Education cannot implement student loan forgiveness until (and unless) the stay is lifted.
Advocates for student loan borrowers expressed confidence in the program going forward.
“Today, a judge ordered the suspension of President Biden’s student loan forgiveness plan…I would like to clarify that this is part of the legal process. We are confident that it will be maintained and borrowers will receive relief in due course.” Cody Hounanian, Executive Director of the Student Debt Crisis Center, said in a statement:
The White House issued a statement Friday night urging borrowers to continue applying for student loan forgiveness.
“Tonight’s temporary order does not prevent borrowers from applying for student debt relief. studentaid.gov – and encourage eligible borrowers to join the approximately 22 million Americans that the Department of Education already has information about. It also reviews these applications and prepares them for submission to loan servicers This does not prevent you from doing so. It is also important to note that this order does not overrule the trial court’s dismissal of the action or imply that the action has merit. It just prevents the debt from being discharged until the court makes a decision. ”