Biden’s student loan forgiveness program blocked by appeals court

A federal appeals court on Monday halted the student loan forgiveness program announced earlier this year by President Joe Biden, days after a separate judge ruled it to be unlawful.

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The three-panel 8th U.S. Circuit Court of Appeals issued a preliminary injunction to block the program as six states challenge its legality. The opinion issued Monday focused on whether the states had standing to bring a challenge. The court determined that at least one state – Missouri – did.

“Whatever the eventual outcome of this case, it will affect the finances of millions of Americans with student loan debt as well as those Americans who pay taxes to finance the government and indeed everyone who is affected by such far-reaching fiscal decisions,” the appeals court said in the opinion published Monday. “As such, we approach the motion before us with great care.”

The case centers around claims from officials in Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina who argue that Biden’s announced student debt-relief program exceeds the authority granted to the U.S. Secretary of Education. The challenge was dismissed on the grounds that the states lacked the necessary legal standing. The states have appealed, Reuters reported.

On Monday, the appeals court determined that the debt-relief program should remain paused as a court reviews the states’ arguments due to its potentially “irreversible impact” on borrowers and states. The court determined that an injunction would cause no harm because student loan payments remain paused.

In a statement, Missouri Attorney General Eric Schmitt praised the court’s decision as a “big win for our Office and for Americans across the country.”

“Millions of hardworking Americans have felt the pain of increased inflation and rising prices due to the Biden Administration’s disastrous policies,” he said. “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.”

Last week, a federal judge in Texas determined that the program was unlawful and blocked officials from continuing it. White House press secretary Karine Jean-Pierre said the Justice Department is appealing the decision.

“We’re confident that this baseless decision will be overturned,” she said. “And when it is, we will quickly process relief for the millions who have already applied.”

About 26 million Americans have applied for the debt relief program so far, including 16 million people whose applications have been approved, officials said.

Biden unveiled the program in August, saying that it would “provide more breathing room for people so they have less burden by student debt.” It would provide as much as $20,000 in student loan debt relief for Pell Grant recipients and as much as $10,000 in relief for federal student loan borrowers who make less than $125,000.

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