Appeals court keeps Biden student loan forgiveness plan on pause

A federal appeals court on Wednesday rejected the Department of Education’s request to delay a court decision that ruled the Biden administration’s student loan debt relief program unlawful.

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The New Orleans-based 5th U.S. Circuit Court of Appeals rejected the administration’s request to pause a judge’s Nov. 10 order that put the estimated $400 billion student debt relief program on hold.

The court’s decision on Wednesday concerned the lawsuit brought by the Job Creators Network Foundation. The group had filed a lawsuit on behalf of a borrower who did not qualify for the full $20,000 in debt relief that President Joe Biden’s plan offered, and on behalf of another person who was ineligible for debt relief altogether.

According to the lawsuit, the administration violated federal procedures by denying borrowers the opportunity to provide public comment on a proposed plan before putting the plan into place.

Another part of the suit claims the administration made an arbitrary decision about who qualifies for the program and how much of their debt would be canceled.

In the Nov. 10 ruling, the judge said that the program was unlawful, effectively ending it.

Biden announced in August that the government was forgiving up to $10,000 in federally backed student loans, or up to $20,000 if the loan had been made through the Pell Grant program. Around 40 million Americans would qualify for the debt forgiveness.

Republicans have come out against the estimated $400 billion plan saying 87% of Americans do not have student debt,

Several lawsuits were filed against the plan in the months following Biden’s announcement. In one of those suits, six states joined to sue, claiming that the program would lead to a loss of revenue for debt servicers if the debts are forgiven.

The six states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — won an injunction that put the plan on hold.

The administration petitioned the U.S. Supreme Court to lift that injunction and reinstate the program. That case is now before the U.S. Court of Appeals for the 8th Circuit.

The administration announced last week that it is extending the pause on federal student loan repayments to allow for the Supreme Court to consider the suits against the program. The pause will end no later than June 30, 2023, and the payments will resume 60 days after the pause ends no matter when it ends..

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