A federal appeals court on Monday blocked the Biden administration’s student loan forgiveness plan, putting another hurdle in the way of a program that promised to forgive up to $20,000 in student loans for nearly 40 million Americans.
The decision of the 8th Circuit Court of Appeals comes in response to a lawsuit filed jointlyIt argued that the Biden administration was encroaching on its executive powers. The lawsuit also alleged that Missouri’s debt servicer would face “multiple ongoing financial losses” if the loans were forgiven, and that the other states behind the suit would also see revenue disruptions to their coffers.
It marks the second court ruling blocking the White House’s debt-relief program since a federal judge in Texas on Thursday blocked the program and,
On Monday, the 8th Circuit ruled that at least one state, Missouri, had the legal position to challenge the Biden plan. The ruling noted that Missouri is likely to suffer if the loan forgiveness plan goes ahead as the Missouri Higher Education Loan Authority (MOHELA) will suffer a financial blow “if a large portion of its accounts are no longer active” due to the Biden plan. .
In turn, this would affect Missouri’s ability to fund higher education at its public colleges and universities, the ruling said.
The court said it is considering issuing a limited injunction that would only halt the Biden plan in the six states that filed the lawsuit, but said it would be “impractical.” MOHELA, it noted, is one of the largest nonprofit student loan secondary markets in the US, serving $168.1 billion in student loans.
“In view of Mohela’s national role in servicing the accounts, we do not see any practical way in this emergency posture to dilute the scope of relief,” the court said.
The Biden administration can appeal against this decision to the Supreme Court.
The Education Department did not immediately return a request for comment. White House Press Secretary Karine Jean-Pierre said Monday that the administration is “convinced in our legal right to have a student debt relief program.” He said the White House plans to “continue to fight these baseless lawsuits by Republican officials and special interests.”
The decision comes after the 8th Circuit Court of Appeals in Octoberstudent loan forgiveness program in response to an emergency motion brought by attorneys from six Republican-led states.
26 million applicants
Court decisions on Thursday and Monday left out the 26 million people who have applied for the debt-relief program. Biden administration after Thursday’s decisionfor your student loan forgiveness program.
The Biden administration appealed Thursday’s decision to US District Judge Mark Pittman, who was appointed by former President Donald Trump, declaring the program “illegal.”
Borrowers are facing a financial deadline, with the student loan repayment interval currently set to end in December, and repayment scheduled to resume in January. If matters are not resolved before this, millions of people could be put on the hook for payments they may not have anticipated.