More News:

October 22, 2022

A federal appeals court temporarily blocked Biden's student loan forgiveness plan

On Thursday a lawsuit alleging the president overstepped with his plan to forgive up to $20,000 of debt for eligible borrowers was dismissed in court

A temporary ban has been placed on President Joe Biden's student debt forgiveness plan.

On Friday, the U.S. appeals court in St. Louis put a brief ban on the plan after a group of GOP leaders appealed a decision to throw out a lawsuit against it. An expedited briefing is scheduled to determine the results of the appeal.

Republican government leaders from Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina alleged that the president overstepped his authority with his plan to forgive up to $20,000 of federal student loans for eligible borrowers.

The lawsuit also alleges that states, loan lenders, and servicers will lose money and suffer financial losses because of the debt cancellation.

While the block is in place, it only stops debt from being discharged from student loan accounts; it does not reverse the court's decision to throw out the case against Biden's plan.

Nebraska Attorney General Doug Peterson, one of the leaders of the lawsuit, said that the estimated $400 billion it would cost to remove the debt is an important legal issue involving the president's power and should be carefully analyzed.

On Thursday, U.S. District Judge Henry E. Autrey dismissed the lawsuit, simply stating that the plaintiffs lacked the standing to bring a lawsuit to stop an economic policy by the Biden administration. 

After the case was dismissed, Peterson said, "the states continue to believe that they have the standing to raise important legal challenges. As a result, the state will be appealing and seeking immediate relief."

White House press secretary Karine Jean-Pierre said that Republican leaders are doing everything they can to deny debt relief.

What is next for the student loan forgiveness plan?

Biden's administration planned to officially roll out its debt cancellation plan as early as Tuesday, Oct. 25; however, a ruling on the appeal is not expected by then, according to Forbes. While there is no ruling, eligible borrowers should still complete the application that went live last week. While applications can still be accepted, as previously mentioned, no money can be dispersed while there is a block on the plan.

The White House released a statement encouraging people to still apply for student loan forgiveness on Friday.

"Tonight's temporary order does not prevent borrowers from applying for student loan debt relief at We encourage eligible borrowers to join the nearly 22 million Americans whose information the Department of Education already has. It also does not prevent us from reviewing these applications and preparing them for transmission to loan servicers, " the release said.

In August, Biden unveiled his plan to cancel student debt for qualifying federal loan borrowers. Eligible borrowers who received pell grants could cancel up to $20,000 worth of debt or what is left of their bill. Eligible borrowers who did not receive pell grants would be eligible for up to $10,000 in debt cancellation.

Income thresholds determine eligibility. All single tax filers who made less than $125,000 when they filed their last returns and received federal loans on federal plus graduate school loans are eligible to receive some debt relief. People who filed joint tax returns had to have a combined income of less than $250,000.

The Department of Education estimated that 90% of borrowers would be those no longer in college and making less than $70,000 yearly.

Biden's plan also aims to lower the amount borrowers will pay monthly from 10% to 5% of a person's discretionary income and increase the threshold for non-discretionary income, protecting more borrowers from repayment if they earn below 225% of the federal poverty level.