Cancellation of student loans in the USA: A federal appeals court stops Joe Biden

After granted a stay on Friday, October 21st, a Federal Court of Appeals has temporarily stopped President Joe Biden’s plan to cancel student loans. The states’ emergency petition to halt the loan forgiveness program was granted by the 8th U.S. Circuit Court of Appeals. At the same time, the court considered their request for a longer-term injunction and the appeal of the court’s ruling against the states on Thursday.

In a lawsuit brought by six states with Republican governors, the 8th U.S. Circuit Court of Appeals sided with the plaintiffs. Until consideration of an injunction is concluded, the court temporarily halted the program, which would have forgiven up to $10,000 in debt for qualified non-Pell Grant applicants.

To appeal the order, the administration has until Monday, October 24 at 6 p.m. ET.

The White House declared that they will continue to make preparations for implementing the program notwithstanding the ban.

According to press secretary Karine Jean-Pierre, “tonight’s temporary injunction does not restrict borrowers from applying for student debt relief at — and we encourage qualified borrowers to join the roughly 22 million Americans whose information the Department of Education already holds.” Additionally, it doesn’t stop us from reviewing these applications and getting them ready to be sent to loan servicers.

According to her, the injunction “merely blocks debt from being dismissed until the court reaches a decision” rather than “indicate that the lawsuit has merit.”

Following the order, Education Secretary Miguel Cardona made a statement to that effect, noting that despite the temporary ban, the agency can still assess the “millions of applications” it has received since the program’s inception. The Court of Appeals’ conclusion follows U.S. District Judge Henry Autrey’s dismissal of the case on the grounds that the six states — South Carolina, Nebraska, Missouri, Arkansas, and five others — had failed to establish their legal standing.

In August, Biden revealed his strategy, and the application process began on Monday. After the announcement on Monday, Miguel Cardona, the secretary of education, said that more than 8 million debtors had already used the “beta” — or test — version of the application to request forgiveness.

Under the program, anyone with student loan debt who make less than $125,000 annually can apply for debt relief of up to $10,000, or up to $20,000 for qualified borrowers who were also Pell Grant winners.

In order to assist former college students who are burdened with debt, Biden promised during the 2020 presidential campaign. The debt forgiveness would cost the government nearly $400 billion, according to a September estimate by the Congressional Budget Office.

In the midterm elections on November 8 that will determine who controls Congress, Democrats are hoping that the proposal would increase support for them. However, in prior court filings, the Biden administration had stated that student loan cancellations might start as soon as this Sunday.

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Olivier Noudjalbaye Dedingar

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