Biden's student loan forgiveness was put on hold by a federal appeals court because of challenges to the program.

Biden’s student loan forgiveness was put on hold by a federal appeals court because of legal challenges to the program.

No ‘Free’ Student Loan Relief, Yet

The 8th Circuit Court of Appeals blocked Biden’s student loan forgiveness plan, for now, upon the emergency request of a coalition of Republican-led states, which are Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina, and Wisconsin.

These states had sued the Biden administration in a federal district court in Missouri, arguing that Biden’s plan would lead to lost revenue and other financial harms for states and their state-affiliated FFELP lenders and servicers, such as MOHELA. The federal district court judge dismissed the lawsuit, but the states then appealed to the 8th Circuit.

The Defense of Freedom Institute (DFI) wrote a letter to U.S. Department of Education Inspector General Sandra Bruce last Wednesday asking for an immediate “pause” to student loan cancellation applications until necessary precautions are implemented to prevent waste, fraud and abuse.

The DFI criticized the Education Department’s current measure allowing for “self-certifications” to verify eligibility for the cancellation program, noting the potential for waste to come from the allotted $430 billion cost.

Financial and Political Pushback

A district court dismissed the Republican states’ case on Thursday for lack of standing, but on Friday, the US Court of Appeals for the Eighth Circuit granted a stay in response to an appeal by those states.

In Wisconsin and Minnesota, legislators have pledged to update tax codes so that debt-forgiveness taxes would not be imposed. In the lawsuit brought by the states, lawyers for the administration said the Department of Education has “broad authority to manage the federal student financial aid programs.”

A court filing stated that the 2003 Higher Education Relief Opportunities for Students Act, or HEROES Act, allows the secretary of education to waive or modify terms of federal student loans in times of war or national emergency.

What’s Next?

The temporary halt doesn’t impact other federal student loan forgiveness programs, like the Public Service Loan Forgiveness (PSLF) or the Limited PSLF Waiver initiative, which is set to end on October 31.

The application for Biden’s student loan forgiveness program is still active and available after going live last week. The Education Department received over 22 million borrower applications, and will still review applications. The department cannot process applications or implement any student loan forgiveness while the emergency stay remains in force.

If you’ve already applied, you do not need to reapply. For those who have not yet applied, you can still apply even though the program is on hold.

Further Reading:

Biden’s New Student Loan Forgiveness Explained

Get the news you need at It’s On News.

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *