President Joe Biden's federal education loan forgiveness plan was thwarted by a federal appeals court on Monday to the court placing an injunction around the program pending further appeals. This is actually the latest setback for Biden's loan forgiveness agenda, which was blocked by a federal judge just 72 hours previously November 11.
In August, Biden announced an education loan forgiveness plan which would forgive as much as $20,000 in student loans for individual borrowers making less than $125,000 annually and married couples making less than $250,000 annually. At that time, Biden also announced sweeping changes to already established Income-Driven Repayment plans (IDRs), dramatically reducing the amount that individuals would be necessary to pay back before having their remaining loan balances discharged. Excluding the price of IDRs along with other changes, the Congressional Budget Office estimates that Biden's plan would cost $400 billion.
But the plan is constantly on the face challenges. Last week, a federal judge ruled this program unconstitutional, discovering that a 2003 federal law that Biden used to justify the loan forgiveness does not \”provide the chief branch clear congressional authorization to create a $400 billion student loan forgiveness program.\” The Department of Justice filed an appeal of the decision on Friday, according to White House Press Secretary Karine Jean-Pierre.
Adding to the Biden administration's issues, the U.S. Court of Appeals for that 8th Circuit placed an injunction on the plan on Monday-agreeing with a request from a number of six Republican-controlled states. The injunction will remain in position and bar the administration from forgiving many students loan debt until one more ruling in the 8th Circuit or even the Supreme Court is brought forth.
In its ruling, the 8th Circuit's three-judge panel discovered that Missouri, among the states bringing the suit, has appropriate standing in the situation because, it argues, Biden's student loan forgiveness plan would lead to decreased revenue for that Missouri Higher Education Loan Authority (MOHELA), a partially state-controlled federal education loan servicer, and, therefore, hurt the state as a whole.
\”MOHELA may well be an arm of the State of Missouri under the reasoning in our precedent,\” wrote the 8th Circuit in its opinion released on Monday. \”Due to MOHELA's financial obligations to the State treasury, the challenged education loan debt cancellation presents a threatened financial harm to your Missouri.\”
For this reason, the court argued that the injunction was necessary to prevent harm while legal action from the Biden administration's plan is ongoing, writing that \”the equities strongly favor an injunction considering the irreversible change up the Secretary's debt forgiveness action would have than the insufficient harm an injunction would presently impose.\”
While it's still unclear what the ultimate fate of Biden's student debt relief proposal is going to be, the mounting legal challenges to the program certainty spell trouble for its supporters-and relief for its detractors.
