A federal appeals court Monday issued a nationwide injunction temporarily barring the Biden administration's student loan debt relief program.
The ruling by the 8th Circuit Court of Appeals in St. Louis is the latest in a series of legal challenges to President Joe Biden's plan to cancel up to $20,000 in student debt for millions of Americans. The Biden administration stopped accepting applications for its relief on Friday after a federal district judge in Texas struck down its plan Thursday evening, calling it "unconstitutional."
Monday's decision by the appeals court came after six GOP-led states argued in a lawsuit that the loan relief program threatens their future tax revenues and that the plan circumvents congressional authority.
"The injunction will remain in effect until further order of this court or the Supreme Court of the United States," a three-judge panel of the appeals court said in its ruling.
The injunction will put the program on hold pending an appeal of a lower court ruling that had allowed the debt relief program to go forward. The Biden administration could ask the Supreme Court to lift the injunction.
"We are confident in our legal authority for the student debt relief program and believe it is necessary to help borrowers most in need as they recover from the pandemic," White House Press Secretary Karine Jean-Pierre said. "The Administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle class Americans."
Ruling focuses on potential harm to state revenue
A federal judge originally rejected the challenge brought by the six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — saying that while they raised "important and significant challenges to the debt relief plan," they ultimately lacked legal standing to pursue the case.
The main obstacle for those hoping to bring a legal challenge against Biden's plan has been finding a plaintiff who can prove they've been harmed by the policy. "Such injury is needed to establish what courts call 'standing,'" said Laurence Tribe, a Harvard law professor.
The appeals court said that Missouri had shown a likely injury in fact from the program, pointing out that a major loan servicer headquartered in the state, the Missouri Higher Education Loan Authority, or MOHELA, would lose revenue under the plan. Missouri's state treasury department receives money from MOHELA.
"And since at least one party likely has standing, we need not address the standing of the other states," the panel concluded.
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Biden's plan would cancel up to $20,000 in federal student debt for borrowers who received a Pell Grant, which is a type of aid available to low-income families. Borrowers without such a grant are eligible for up to $10,000 in relief. More than 30 million people are projected to benefit from the plan.
"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."