Student Loan Forgiveness Hits a Roadblock

The decision by an appellate court to halt President Biden’s student loan forgiveness program just as it springs into gear suggests that the constitutional course is not entirely clear for the government’s scheme to wipe away hundreds of billions of dollars in debt the government owns or guarantees in full. The ruling — a temporary stay — came from the riders of the United States Court of Appeals for the Eighth Circuit, headquartered at St. Louis. It came just one day after a federal district court judge, Henry Autrey, rejected a bid by six states to halt the program.Judge Autrey acknowledged that the suit raised “important and significant challenges to the debt relief plan” but ultimately declined to provide relief because the states could not show standing to sue, as they bore the brunt of “speculative” harm.The ruling from the circuit riders means that student loan forgiveness will be frozen nationwide while the jurists mull the merits of a longer term — and more durable — injunction. President Biden announced on Friday that 22 million people have applied to the program during its first week in operation. The stay came on the heels of a futile appeal to the high court, with Justice Amy Coney Barrett rejecting an emergency petition to stop the program. That decision was issued with no comment or dissent, suggesting that it did not touch the merits but was merely an indication that the court would not move out of turn.White House Press Secretary Karine Jean-Pierre promised that “we will continue to move full speed ahead in our preparations in compliance with this order.” She noted that the order did not stop borrowers from applying to the program, nor the government from reviewing those submissions. While the stay is in place not one cent of debt can be officially forgiven. The Biden Administration contends that it has the authority to cancel debt under the auspices of the Higher Education Relief Opportunities for Students Act of 2003, which allowed for loan modification or forgiveness in times of “national emergency.” The president argues that Covid-19 was one such crisis.According to the expedited briefing schedule laid out by the Eighth Circuit, the government owes its response to the stay by Monday, after which that body will set a timeline to hear more fulsome arguments from both sides. Whichever way it rules, another Supreme Court appeal appears inevitable.

Student Loan Forgiveness Hits a Roadblock

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