Federal Court Halts Biden’s Student Loan Debt Forgiveness for Now

By Brandon Patterson

A federal appellate judge on October 21 temporarily blocked the Biden Administration from cancelling student debt in response to a lawsuit filed by six conservative states alleging they could be hurt financially by the plan.

The court blocked the plan after the states appealed a lower court’s decision to throw out their suit due to failure to show they would be hurt by it. The court ruling does not prevent the administration from operating the debt forgiveness application or prevent people from applying, the White House said. But no debt can be waived until the court issues a final decision. It is not clear how long the temporary decision will last.

The administration had intended to start cancelling loans as soon as October 23, court records show, according to USA Today. The plan, announced in August, would cancel $10,000 in debt for eligible applicants and $20,000 for Pell Grant recipients.

“Plaintiffs will suffer no irreparable injury from the provision of much-needed relief to millions of Americans, but the public interest would be greatly harmed by its denial,” the Biden Administration said in legal filings, adding that, if the court disagrees, any injunction should only apply to the states that filed the lawsuit, where about 2.8 million people are eligible for forgiveness, according to USA Today. Those states include Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina.

Conservatives have attacked the debt forgiveness plan as expensive overreach of executive authority since the plan was announced. In this case, the six states argued that the debt forgiveness plan could incentivize student loan borrowers with loans serviced by the states, which aren’t eligible for debt forgiveness, to swap those loans for federal loans that are eligible, costing the states money, according to USA Today.

The administration, however, says the Department of Education already changed its loan regulations to disallow the swaps, according to USA Today, rendering the issue moot. The states also argue, however, that the administration has no authority to cancel the debt at all. The administration has held that a 2003 law allows the executive branch to reduce or erase student loan debt.

The case is just one of many lawsuits over Biden’s debt cancellation plan. At least six different parties have challenged the plan in court. In most cases, however, the lawsuits have been quickly dismissed, according to USA Today.