Biden’s student debt relief plan is temporarily blocked. Here’s what you need to know.
A federal appeals court has temporarily blocked President Biden’s student loan forgiveness plan — halting any debt from being erased. But the administration is encouraging people to continue submitting their applications.
The Friday evening ruling comes less than a week since the application portal went live. Already, nearly 22 million people — more than half of qualifying borrowers — have signed up. The administration could have begun processing applications and changing loan balances beginning Sunday.
“The order does not reverse the trial court’s dismissal of the case, or suggest that the case has merit,” White House press secretary Karine Jean-Pierre said in a statement Friday evening. “It merely prevents debt from being discharged until the court makes a decision.”
The block was issued by the U.S. Eighth Circuit Court of Appeals, which is considering a motion from six Republican-led states to stop the program. It’s one of several lawsuits that have aimed to challenge the program.
Earlier this week, Supreme Court Justice Amy Coney Barrett rejected similar efforts from a Wisconsin taxpayer group.
What happened in the court case?
Six states — Arkansas, Missouri, Nebraska, Iowa, Kansas and South Carolina — filed a lawsuit arguing that the federal relief program would hurt state-based loan companies that manage some federal loans themselves.
Earlier this week, a federal judge dismissed the case, saying it had no standing. The group then appealed and asked a federal appeals court to place a temporary hold on the program while the appeals court reviews the case.
For those who haven’t yet applied, what should they do now?
The application on studentaid.gov remains open. Jean-Pierre said the temporary order does not prevent borrowers from applying for relief and she encouraged eligible borrowers to do so if they haven’t already.
What is going to happen to people who’ve already applied for debt cancellation?
According to Jean-Pierre, the court decision does not stop the federal government from reviewing applications nor preparing documents for loan servicers.
“We are moving full speed ahead to be ready to deliver relief to borrowers,” Education Secretary Miguel Cardona said.
“Today’s temporary decision does not stop the Biden Administration’s efforts to provide borrowers the opportunity to apply for debt relief nor does it prevent us from reviewing the millions of applications we have received,” he said.
How long will the court block last?
One of two things can happen in the upcoming days: either the court can issue an injunction and the pause will last longer or it can dismiss the case and the program can carry on.
The federal appeals court is expected to announce a ruling as soon as early next week.