U.S. Appeals Court Temporarily Blocks Biden Student Debt Forgiveness

• A district court judge threw out a lawsuit from six Republican-led states.
• The attorneys general from those states quickly appealed the decision.
• That appeal is still under consideration. But until a decision is issued, debt forgiveness cannot move forward.

One day after a federal judge tossed a Republican-led challenge to President Joe Biden's federal student debt forgiveness plan, a U.S. appeals court temporarily blocked the administration from canceling loan debt.

The 8th U.S. Circuit Court of Appeals late Friday granted a motion from six Republican-led states suing the Department of Education (ED) over the president's federal student loan debt forgiveness plan. According to court documents, ED may not discharge debts until the court makes a ruling on the request for a preliminary injunction.

Biden administration officials still recommend that qualifying borrowers apply for debt relief.

Today's temporary decision does not stop the Biden administration's efforts to provide borrowers the opportunity to apply for debt relief nor does it prevent us from reviewing the millions of applications we have received, ED Secretary Miguel Cardona said in a statement. Amidst Republicans' efforts to block our debt relief program, we are moving full speed ahead to be ready to deliver relief to borrowers who need the help.

Biden announced a plan in August to forgive up to $10,000 in federal student loan debt per borrower making less than $125,000 per year. Pell Grant recipients can qualify for up to $20,000 in forgiveness.

Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina on Sept. 29 filed a joint lawsuit against the president and ED. Their central claim was that the plan to wipe student debt will cost these states revenue from servicing loans and taxes. They also claimed that ED doesn't have the authority to carry out Biden's plan.

Judge Henry Edward Autrey of the Eastern District of Missouri late Thursday denied a motion for a preliminary injunction to stop debt forgiveness from going into effect. He also threw out the case, claiming the states and their attorneys general do not have the standing to sue.

The states quickly appealed the decision.

The U.S. Court of Appeals for the 8th Circuit granted the stay late Friday.

Nebraska Attorney General Doug Peterson celebrated the court's stay.

We are pleased the temporary stay has been granted, Peterson said in a Friday statement. It's very important that the legal issues involving presidential power be analyzed by the court before transferring over $400 billion in debt to American taxpayers.

The court's stay suggests that it intends to move quickly in reaching a decision.

The court stated that ED has until the end of Monday, Oct. 24, to file a response. The six states would have until the end of Tuesday to file a reply.

Still, the timeline for a final decision and an end to the stay is unclear. Considering applications for relief opened Oct. 14, most did not expect debt to be discharged until mid-November.