A federal appeals court on Friday halted implementation of President Joe Biden’s student debt relief program, dealing a blow to the administration just days after it began accepting applications from borrowers to have as much as $20,000 in loans canceled.
The 8th Circuit Court of Appeals hit pause on the Biden administration’s efforts while it considers an appeal from officials in six GOP-led states who had their lawsuit against the program dismissed by a federal judge on Thursday.
In its one-page ruling, the court prohibited any student loan debt to be discharged under the program until the court rules on the appeal. The court said that the Biden administration had until Monday to respond.
White House press secretary Karine Jean-Pierre on Friday emphasized that the appeals court ruling does not prevent borrowers from submitting applications for loan forgiveness.
"It is also important to note that the 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," she said in a statement. "We will continue to move full speed ahead in our preparations in compliance with this order. And, the Administration will continue to fight Republican officials suing to block our efforts to provide relief to working families."
The case before the appeals court stems from a lawsuit filed by officials in Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina last month in an effort to block implementation of the administration's program.
The six Republican-led states argue that the Biden administration is going beyond what Congress intended to authorize, and that the law being invoked by administration officials does not allow for the program's debt cancellation.
Arkansas Attorney General Leslie Rutledge tweeted after Friday’s ruling that Biden’s plan is illegal. “Hardworking Americans who did not take on this debt should not be forced to shoulder this burden,” she wrote.
Asked Monday whether he was worried litigation could get in the way of his program, Biden said: “Our legal judgment is that it won’t, but they are trying to stop it.”
Biden in August announced his program to forgive up to $10,000 for borrowers, and up to $20,000 for those who received Pell Grants. Those who earn less than $125,000 a year, or $250,000 couples who file taxes jointly, are eligible.
In announcing the program, Biden said the cost of education has increased and that “an entire generation is now saddled with unsustainable debt.”
The Biden administration said in September that over 40 million borrowers would be eligible for the program, and that nearly 20 million could see their remaining balance eliminated.
The nonpartisan Congressional Budget Office has estimated that the program could cost around $400 billion. As of the end of June, 43 million borrowers held $1.6 trillion in federal student loans, it said.