The application for President Joe Biden's student loan forgiveness program went live in mid-October, and 22 million people, more than half of eligible borrowers, have already applied for forgiveness. However, while the remaining borrowers can still submit an application, the plan itself has now been stalled in court.
On the evening of Friday, October 21, the U.S. Eighth Circuit Court of Appeals ruled that the plan would be temporarily blocked. The federal court is considering a lawsuit from six right-leaning states that are attempting to challenge the forgiveness program.
Attorneys general from Arkansas, Missouri, Nebraska, Iowa, Kansas, and South Carolina argue that Biden's plan would hurt private loan companies and that the Administration doesn't have the authority to make such a decision.
Under the stalled forgiveness plan, borrowers making less than $125,000 per year could have up to $10,000 in student debt erased, or up to $20,000 if they received Pell Grants. According to the Administration, 90% of those eligible for forgiveness under the program are making less than $75,000 per year.
U.S. District Judge Henry Autrey dismissed the states' suit in federal court on Oct. 20, saying it had no standing. Attorneys with the states appealed Autrey's ruling and also requested that the courts issue a temporary block on the program. The court approved the block but hasn't yet made a decision on the suit itself.
"The order does not reverse the trial court's dismissal of the case, or suggest that the case has merit," White House press secretary Karine Jean-Pierre said on Friday. "It merely prevents debt from being discharged until the court makes a decision."
As Autrey argued in his ruling, a lack of standing is one of the key issues standing in the Republicans' way. Standing is established by showing that there is an individual or entity that has been harmed by the policy.
"No individual or business or state is demonstrably injured the way private lenders would have been if, for instance, their loans to students had been canceled," Harvard law professor Laurence Tribe said.
For a limited time, borrowers with some types of federal loans, Federal Family Education Loans (FFEL), could consolidate their loans into the main federal student loan debt program to get relief. These loans are held with private lenders, meaning those lenders could be hurt by the policy. However, the Administration removed that option for FFEL borrowers in order to protect the program as a whole.
While the program is stalled, the application is still available, and the Administration is encouraging borrowers to continue to apply. The block prevents the program from issuing forgiveness, but it doesn't stop the process of receiving and reviewing applications or filing documentation with loan servicers.
"We are moving full speed ahead to be ready to deliver relief to borrowers," said Education Secretary Miguel Cardona. "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."