ST. LOUIS – President Joe Biden’s plan to forgive millions of borrowers’ student loans was dealt another legal blow Monday when a panel of federal appeals courts agreed to stopping the project while the appeal is pending.
The decision by a three-judge panel from the 8th US Circuit Court of Appeals in St. Louis came days after a federal judge in Texas blocked the program, saying Congress had usurped the power to make the law. The Texas case was appealed, and the ruling is likely to be appealed by the 8th Circuit.
The plan would eliminate $10,000 in student loan debt for those with less than $125,000 or for households with an income of less than $250,000. Pell Grant recipients, who demonstrate greater financial need, receive an additional $10,000 forgiven. The waiver applies to federal student loans used to attend undergraduate and graduate school, as well as Parent Plus funds.
The Congressional Budget Office said it will spend $400 billion over the next three years.
A federal judge on Oct. 20 allowed the program to continue, but the 8th Circuit the next day took a temporary hold while considering actions by the states of Nebraska, Missouri , Iowa, Kansas, Arkansas and South Carolina to ban the debt. deletion plan.
The latest ruling from a panel of three Republican nominees — appointed by President George W. Bush and two by President Donald Trump — will be put on hold until the case is resolved in court.
Part of the state’s argument about the financial damage caused by debt cancellation affects the Missouri Higher Education Funding Authority.
“This sudden funding cut will prevent or delay Missouri’s funding of higher education at its public colleges and universities,” the 8th Circuit ruled.
Nebraska Attorney General Doug Peterson, a Republican, said in a statement that the decision “recognizes that this attempt to wipe out $400 billion in student loans threatens the damage to the economy is irreversible. the evil of power.”
White House Press Secretary Karine Jean-Pierre said in a statement that the administration believes there is legal authority for the program and that it is “necessary to help borrowers in dire need.” they are saved from death.”
“The Administration will continue to fight these unreasonable lawsuits by Republican leaders and special interests, and will not stop fighting to support working and middle-class Americans,” the statement said.
Both cases involve the Higher Education Relief Opportunities for Students Act of 2003, also known as the HEROES Act. Enacted after the 9/11 terrorist attacks, the secretary of education can waive or change the terms of federal funding during times of war or national emergency.
Attorneys for the administration argue that the covid-19 pandemic has created a national emergency, and that student loan costs have skyrocketed over the past 2 1/2 years.
But in a Texas decision Thursday, U.S. District Judge Mark Pittman — a Trump supporter who lives in Fort Worth — said the HEROES ACT did not provide the authority the administration claimed. and Biden.
According to Karine Jean-Pierre, so far, 26 million people have applied for a loan, and 16 million people have been approved. After the Texas decision, the agency stopped accepting applications.
“Courts have issued orders to stop our student loan relief program,” the Department of Education said on its federal student aid website. “Therefore, at this time, we are not accepting requests.
Legal challenges have been outlined for borrowers seeking to have their debts canceled and resume payments on January 1, after a hiatus due to the covid-19 pandemic.
Economists are concerned that many people have yet to recover financially from the pandemic, saying that if pending debt cancellations are required to pay off debt, many will fall behind. their bill and default.