Biden’s Debt Relief Plan Blocked Indefinitely by Court (2)

The US government can’t discharge any student loans under President Joe Biden’s massive debt forgiveness plan because a federal appeals court blocked the program indefinitely.

Monday’s ruling bars the forgiveness of as much as $20,000 of debt to qualified borrowers nationwide while the 8th US Circuit Court of Appeals in St. Louis considers a request from six Republican-led states to revive their legal challenge to the plan. A district court judge dismissed the states’ lawsuit on Oct. 20.

The appeals panel said the impact of the debt forgiveness would be irreversible, compared to the lack of harm stemming from an extension of the injunction. Implementation of the plan has been on hold since Oct. 21 when the appeals court issued an emergency stay.

The appeals court ruling is another major setback for the Biden administration’s plan, which has faced a slew of legal challenges from conservative groups since its inception. On Thursday, a federal judge in Texas declared the debt forgiveness plan unlawful in a separate lawsuit, prompting the US Department of Education to stop accepting applications for loan forgiveness for the time being.

White House Press Secretary Karine Jean-Pierre said in a statement that the Biden administration is confident the student debt relief plan is legal.

“The administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle class Americans,” she said.

Read More: Biden Student Loan Relief Rollout Imperiled by Court Challenges

About 26 million people had already applied under the plan which calls for as much as $20,000 to be forgiven for qualified borrowers making less than $125,000 a year, or $250,000 for households.

Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina sued to block the plan in September, arguing that it poses a financial threat to each state in the form of lost tax revenue.

“The Biden administration’s attempt to forgive student loan debt would saddle Americans who did not take out loans or who have paid their loans off already with even more economic woes,” Missouri Attorney General Eric Schmitt said in a statement. “This is a big win for our office and for Americans across the country, and we will keep up the fight.”

In defending the program as lawful, the Biden administration argued in court filings before the 8th Circuit that if it must be put on hold, the debt relief should be paused only for borrowers in the six states behind the lawsuit. The court declined to do so, writing in Monday’s order that limiting the injunction to the named states would “be impractical and would fail to provide complete relief.”

The case is Nebraska v. Biden, 22-3179, 8th US Circuit Court of Appeals.

(Adds context about other legal challenges and White House comment.)

To contact the reporter on this story:
Madlin Mekelburg in Austin at mmekelburg@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net

Joe Schneider, Peter Jeffrey

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