Appeals court blocks Biden student debt cancellation plan

A federal appeals court on Monday temporarily blocked the Biden administration’s student loan forgiveness program, which had already been halted nationwide by a separate court ruling.

The latest ruling, by a unanimous three-judge panel on the U.S. Court of Appeals for the 8th Circuit, added to the legal jeopardy surrounding President Biden’s massive debt relief plan.

The panel, which comprised two Trump-appointed judges and one appointee of former President George W. Bush, said its order would remain in effect until further notice by the 8th Circuit or the Supreme Court.

The ruling was a win for six conservative-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — which argued they were harmed by a freeze on the collection of student loan payments and interest.

The court’s six-page ruling singled out the impact on a large, Missouri-based holder of student loans called the Higher Education Loan Authority of the State of Missouri. 

“The equities strongly favor an injunction considering the irreversible impact the Secretary’s debt forgiveness action would have as compared to the lack of harm an injunction would presently impose,” the panel wrote. “Among the considerations is the fact that collection of student loan payments as well as accrual of interest on student loans have both been suspended.”

President Biden’s plan forgives $10,000 in federal student loan debt for those making under $125,000 annually and $20,000 for recipients of Pell Grants, which assist students from lower-income families.

The policy, which the Congressional Budget Office estimates will cost about $400 billion over 30 years, has drawn numerous legal challenges.

Last week, a Trump-appointed federal judge in Texas invalidated the program, saying the presidential action unlawfully encroached on Congress’s power.

The Biden administration has said it plans to appeal the judge’s ruling to the U.S. Court of Appeals for the 5th Circuit.

The White House said its policy is authorized by a 2003 federal law known as the Higher Education Relief Opportunities for Students Act, which both the Trump and Biden administrations have drawn upon to enact student debt relief policies amid the exigencies of the global pandemic.

This story was updated at 2:21 p.m.