Why is Biden’s Student Loan Debt Forgiveness Plan On Hold?

If you’re a student loan borrower keeping up with Biden’s Student Loan Forgiveness Plan, you’re probably very confused…

First, President Joe Biden announced in August that The Department of Education will forgive $10,000 in federal student loan debt for single borrowers whose income is less than $125,000 and households that made less than $250,000 in 2020 or 2021. Recipients of Pell Grants were set to receive an additional $10,000 with the same income thresholds.

Related: What We Know About The Student Loan Debt Relief Plan

But, before much celebrating could happen, Republicans challenged the policy, leaving it in jeopardy even as the application for relief went live. Already, nearly 22 million U.S. student loan borrowers — more than half of those who qualify — have applied for the forgiveness.

Then, on Friday, the biggest setback for the relief plan came when a U.S. appeals court temporarily blocked it from moving forward.

Here’s what you need to know.

Why is Student Loan Forgiveness on Hold?

In September, attorneys general from six states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — filed a lawsuit arguing that the federal relied program would hurt state-based loan companies that manage some federal loans themselves. It was an effort to stop the relief plan, which would cancel hundreds of billions of dollars in student debt.

A federal judge dismissed the case, saying it had no standing. U.S. District Judge Henry Autrey in St. Louis said that while the states had raised “important and significant challenges to the debt relief plan,” they ultimately lacked legal standing to pursue the case.

But after the dismissal, the six states filed an appeal asking the court to pause the president’s lan, which was supposed to start unfolding last week, while their request was considered.

The 8th U.S. Circuit Court of Appeals granted the states’ emergency petition, leaving the Biden administration unable to start forgiving any student debt for now.

However, the application on studentaid.gov remains open, and the temporary order does not prevent borrowers from applying for relief. Since the court’s temporary block, The White House has continued to encourage eligible borrowers to apply if they haven’t already.

Education Secretary Miguel Cardona said, “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… We are still moving full speed ahead to be ready to deliver relief to borrowers.”

Related: Student Loan Forgiveness FAQs

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