A federal judge just temporarily paused Biden’s student-loan forgiveness plan.
This ruling was in favor of six GOP-led states who sued, arguing the relief would hurt state revenues.
For now, the relief cannot progress toward implementation until a final judgment is made.
A federal judge just halted President Joe Biden’s student-loan forgiveness plan as it reviews the legality of the policy.
On Friday, the 8th Circuit Court of Appeals temporarily paused debt cancellation from rolling out in response to a request from six Republican-led states who sued the plan, arguing it presented financial harms to the states’ revenues, along with business operations of loan company MOHELA, which is based in Missouri. This comes after a federal judge on Thursday dismissed the case, ruling that the plaintiffs did not have standing to block the student-debt relief.
In a statement, White House Press Secretary Karine Jean-Pierre said that borrowers can still apply for the program and that the halt does “not prevent us from reviewing these applications and preparing them for transmission to loan servicers.”
She added that the development does not reverse the case’s dismissal on Thursday, but that “it merely prevents debt from being discharged until the court makes a decision.
The states requested the appeals court place a stay on the Biden administration from canceling any student debt by October 22 at 9:00 a.m., a day before the earliest possible date the administration indicated it could start forgiving borrowers’ student loans.
This was the first case to prevail in temporarily halting the plan — at least five other major conservative lawsuits have been filed that sought to block loan forgiveness, but they were either already dismissed by judges or have yet to progress.
“Today, a judge ordered a stay on President Biden’s student debt cancellation plan stemming from a lawsuit filed by a greedy student loan company. We want to be clear that this is part of the legal process. We are confident that the president’s student debt cancellation plan will remain and that borrowers will receive relief in due time,” Cody Hounanian, executive director of the Student Debt Crisis Center, said in a statement.
While the loan forgiveness still awaits a final judgment, this temporary pause means that the status quo of no relief will be preserved until then. It comes just days after Biden officially launched the application for student-loan forgiveness — of which 10 million have already accessed — that requires borrowers to fill out a simple form with basic contact information, like emails and Social Security numbers.
The pause came on the same day Biden announced that about 22 million student loan borrowers applied for the program.
“In less than a week, close to 22 million people have already given us the information to be considered for this life-changing relief,” Biden said during a speech at Delaware State University.
That figure represents a little more than half of the 43 million borrowers who would be eligible for the program.
“We will continue to move full speed ahead in our preparations in compliance with this order,” Jean-Pierre said in her statement. “And, the Administration will continue to fight Republican officials using to block our efforts to provide relief to working families.”
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