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Student Loan Forgiveness Plan Blocked Temporarily by Appeals Court

Biden's debt relief plan has been paused by a federal appeals court as it considers a challenge by six Republican-led states.

Biden stands at a lectern, in front of screens showing facts about the student loan forgiveness program.
President Joe Biden on Oct. 17, announcing the launch of the official application for student loan forgiveness.
Bonnie Cash/Getty Images

The Biden administration's student loan forgiveness plan has been put on hold by a federal appeals court as it considers a challenge to the program by six Republican-led states. The temporary halt prevents the government from erasing any debt, which it had said it could've started doing as soon as Sunday.

A district court dismissed the Republican states' case on Thursday for lack of standing, but on Friday, the US Court of Appeals for the 8th Circuit granted a stay in response to an appeal by those states. The government has until Monday to respond to the states' appeal, and the states have until Tuesday to reply to the government's response.

The Biden administration's plan would forgive up to $10,000 in federal student loan debt for borrowers making less than $125,000 a year (or $250,000 for married couples). Recipients of a Pell Grant for low-income students would have $20,000 of debt erased.

US President Joe Biden put the student loan forgiveness plan in place with an August executive order. The administration pointed to the COVID pandemic and to a federal law it says empowers the education secretary to lessen the burden that borrowers may suffer as the result of a national emergency.

The Republican-led states -- Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina -- argue that the Biden administration overstepped its legal authority and that the plan would injure them financially. The district court judge dismissed their case, saying the states hadn't shown how the program would directly harm them.

Friday's appeals court order "does not reverse the trial court's dismissal of the case, or suggest that the case has merit. It merely prevents debt from being discharged until the court makes a decision," White House Press Secretary Karine Jean-Pierre said in a statement.

Jean-Pierre urged borrowers to continue applying for loan forgiveness via the application, which went live Monday. She said 22 million people have already applied and that the order from the appeals court "does not prevent us from reviewing these applications and preparing them for transmission to loan servicers."