A national injunction was imposed by a federal appeals court on Monday, temporarily prohibiting the Biden administration’s student loan debt reduction initiative.
The latest in a string of court challenges against President Joe Biden’s proposal to forgive up to $20,000 in college debt for millions of Americans is the 8th Circuit Court of Appeals’ decision in St. Louis. After a federal district judge in Texas similarly rejected the Biden administration’s plan Thursday evening, declaring it “unconstitutional,” the administration halted taking applications for temporary relief on Friday.
The appeals court’s judgment on Monday came after six GOP-led states claimed in a lawsuit that the debt forgiveness program jeopardizes their ability to collect taxes in the future and that it lacks congressional authorization.
A three-judge panel of the appeals court ruled that “The injunction will remain in effect until further order of this court or the Supreme Court of the United States”
The injunction will halt the program until a lower court decision that had permitted the debt relief program to proceed is appealed. The Supreme Court may be asked to lift the injunction by the Biden administration.
“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 panel said in its ruling. “As such, we approach the motion before us with great care.”
The plaintiffs contend that the Biden administration disregarded Congress and lacked the legal power to consolidate such a large amount of debt.
Attorneys for the Biden administration contend that the Heroes Act of 2003 grants the Education Department extensive discretion to waive or alter federal student loan requirements in order to address financial hardship brought on by the Covid-19 outbreak. The same statute was claimed by the Trump and Biden administrations as giving them the right to halt student loan repayments and interest accrual during the pandemic.
According to the administration and the department in charge, it currently has income data for 26 million borrowers, which includes both those who have recently applied and the eight million borrowers whose data had already been supplied. We will have to see if the SCOTUS makes a different decision than this appeals court and continues the process of forgiving debt, or if millions of Americans will still be responsible for their own loans. Stay tuned.