Biden’s student debt plan is put on hold after appeals court agrees to hear GOP case

Despite legal challenges, White House continues to urge borrowers to apply for relief as more than 22 million Americans submit applications after program’s launch

A federal appeals court has put President Joe Biden’s plans for student loan debt relief on hold, temporarily blocking the administration from cancelling debt balances for millions of Americans.

The ruling on 21 October follows a lawsuit filed by six Republican-led states and a conservative legal group seeking a preliminary injunction to halt the effort.

A federal judge dismissed that challenge, teeing up the appeal.

In a statement, White House press secretary Karine Jean-Pierre urged borrowers to continue to apply for relief, adding that the administration would “continue to move full speed ahead in our preparations in compliance with this order” and combat GOP-backed legal efforts to stop them.

The appeals court order “does not prevent borrowers from applying for student debt relief at studentaid.gov – and 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,” she added.

On Thursday, conservative US Supreme Court Justice Amy Coney Barrett rejected a separate legal challenge to the Biden administration’s student debt plan, hours before a federal judge in Missouri dismissed a suit filed by attorneys general from GOP-led states Arkansas, Kansas, Missouri, Nebraska and South Carolina and on behalf of Iowa’s Republican governor.

Both cases were rejected for lack of legal standing to sue the administration.

“It is hard to make a cake if you don’t have a pan to put that cake in,” US District Judge Henry Autrey said during oral arguments in the Missouri case, appearing to doubt the plaintiffs’ legal footing. “That pan is standing. It doesn’t matter if you have all the ingredients.”

Under the Biden plan, federal student loan borrowers who earn up to $125,000 a year are eligible for up to $10,000 in canceled higher education debts, or up to $20,000 for borrowers that relied on Pell grants.

More than 22 million Americans have already applied for relief within the first days of the launch of the administration’s debt application website.

The administration is also facing separate challenges from Arizona’s Republican attorney general Mark Brnovich as well as right-wing groups the Job Creators Network Foundation and the Cato Institute, among a wave of legal efforts to stop the administration from striking out debt balances for millions of Americans.

In remarks to announce the launch of a website for debt relief applications on 17 October, Mr Biden called Republican “outrage” against the plan “wrong and hypocritical”.

“Republican members of Congress and Republican governors are trying to do everything they can to deny this relief, even to their own constituents,” he said.

“I will never apologize for helping working Americans and middle-class people as they recover from the pandemic – especially to the same Republicans who voted for a $2 trillion tax cut,” the president added, referencing cuts approved by congressional Republicans and Donald Trump in 2017.

Republicans “didn’t pay for a penny of it and racked up the deficit,” Mr Biden said.

In remarks on 21 October, he specifically called out far-right US Rep Marjorie Taylor Greene and Republican Senator Ted Cruz for criticising the plan while receiving forgivable government loans.

“Who in the hell do they think they are?” the president said.

The student loan debt crisis has exploded to a total balance of nearly $2 trillion, mostly wrapped up in federal loans. Millions of Americans also continue to tackle accrued interest without chipping away at their principal balances years after graduating, or have been forced to leave their colleges or universities without obtaining a degree at all while still facing loan repayments.

A pandemic-era pause on student loan repayment and interest will expire on 31 December, with payments to resume on 1 January.