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Appeals Court Temporarily Halts Biden’s Student Debt Cancellation

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A federal appeals court on Friday temporarily halted President Biden’s student debt relief plan, stopping the federal government from moving forward with the debt cancellation it had said could start as early as next week.

The U.S. Court of Appeals for the Eighth Circuit granted a stay in response to an appeal filed by six Republican-led states after a district court judge dismissed their case on Thursday for lack of standing.

The motion puts any debt cancellation on hold until the court can rule on the states’ request for an injunction stopping the federal government from discharging debts. The court set a Monday deadline for the federal government to submit its response to the states’ filing, and a Tuesday deadline for the states to reply.

“The order doesn’t reverse the trial court’s dismissal of the case, or suggest that the case has merit,” Karine Jean-Pierre, the White House press secretary, said late Friday. “It merely prevents debt from being discharged until the court comes to a decision.”

She encouraged borrowers to proceed applying at studentaid.gov. Nearly 22 million people — greater than half of all those expected to be eligible — have applied for the reason that system opened late last week.

The pause comes someday after Judge Henry E. Autrey of the Federal District Court in St. Louis rejected the states’ claim for lack of standing.

“While plaintiffs present vital and significant challenges to the debt relief plan,” Judge Autrey wrote, “the present plaintiffs are unable to proceed to the resolution of those challenges.”

Mr. Biden’s plan would cancel $10,000 in federal student loan debt for those earning lower than $125,000 per yr, or $250,000 per household, and $20,000 for individuals who received Pell grants for low-income families.

In a speech at Delaware State University on Friday, Mr. Biden attacked the states’ lawsuit, widely considered essentially the most significant of multiple legal challenges that his plan faces. The Education Department has estimated that this system will cost $379 billion over its lifetime, which is greater than 30 years.

“Republican members of Congress and Republican governors are doing every thing they’ll to disclaim this relief, even to their very own constituents,” Mr. Biden said.

In a court filing late Thursday, the suing states reiterated to the Eighth Circuit court their belief that their claims are “prone to succeed on the merits” and that they “have raised substantial or close questions on whether or not they have standing to pursue this case.”

Once any debt is canceled, “the states might be unable to treatment the complete scope of all of the harms they’re experiencing,” the state attorneys said. The states pursuing the lawsuit are Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina.

Mr. Biden enacted the debt forgiveness program by invoking a 2003 federal law that permits the education secretary to change financial assistance programs for college students “in reference to a war or other military operation or national emergency.” The Biden administration has argued that the pandemic constitutes such an emergency.

Establishing standing — the power in court to sue one other party for harms — was all the time expected to be a significant obstacle for those against Mr. Biden’s debt relief plan, and several other lawsuits filed against the federal government by individuals and organizations have already been dismissed for lack of standing.

The Biden administration has already pared back its plan to attempt to block legal challenges. In late September, the Department of Education indicated that some Federal Family Education Loans could now not be consolidated into direct federal loans, that are eligible for forgiveness. This modification would prevent potentially tons of of hundreds of borrowers who thought they were eligible for student loan forgiveness from having their debts cleared.

That has stirred disappointment from borrowers represented by debt relief groups corresponding to the Debt Collective.

Matt Lennartz, who graduated in 2010 from Wright State University in Ohio, took out $27,000 in loans and now owes $42,000 because interest accrued while he was on a hardship deferral.

“I’m beyond frustration, generally speaking, at this point with regard to funds,” said Mr. Lennartz, whose wife’s loans are eligible for relief. “It’s absolutely type of absurd.”

But for college students at Delaware State University — a historically Black school — who might be eligible for relief if Mr. Biden’s plan proceeds, it’ll be a lifeline.

Zachary Bernard, a student who introduced Mr. Biden, said he had taken out loans in 2019 to pay for his tuition and transportation. He’ll have the ability to graduate debt-free if Mr. Biden’s plan is implemented.

“That is breaking barriers in our communities and in our minds about what we are able to do with our future,” Mr. Bernard said, adding that he and his friends can now take into consideration starting businesses and saving for his or her first homes.

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