Barely a week after the application went live on the portal, a federal appeals court has blocked Biden’s Loan forgiveness program. The loan processing, which was expected to begin Sunday, will have to wait until the Court of Appeal’s ruling early next week. After its announcement two months ago, the policy gained supporters and opposers, with some of its challengers filing lawsuits against the Biden government, which the federal government continues to fight legally.
Some groups contesting this popular, not-so-popular plan is a Wisconsin taxpayer group whose case was dismissed earlier in the week by a Supreme Court Justice and six republican led states. Missouri, Nebraska, Kansas, North Carolina, Iowa, and Arkansas have sued the Biden administration to cancel the programs. Still, a federal judge threw the case out earlier this week due to a lack of legal standing. The GOP-led states then filed an appeal and requested the court to put a temporary lid on the plan until the court (appeal) considered their request.
What Does This Mean For Borrowers?
The court’s decision to pause the loan forgiveness program has left 40 million Americans in financial anxiety about what this means for their pending student debt. What does it mean? Is the debt cancellation canceled? If not, for how long? This block is only a temporary stay that prevents the discharge of any debt to borrowers until the court decides on the ruling. This leaves either dismissing the case and resuming the program or issuing an injunction that will prolong the pause.
Until then, borrowers are encouraged to submit applications as the portal will continue taking applications until 15th November. The US Department of Education already has information on 22 million applicants. As the press secretary of the White House, Karine Jean-Pierre reported that the block would not prevent any submission and their reviewing of the applications. Those applying can still do so and expect the transmission to loan servicers once approved. Furthermore, the Biden administration is leveraging other tools to help cancel the $1.6 trillion college debt.
Our Two Cents
While the states have temporarily paused the president’s plan, it is far from proving injury to an individual, business, or state by the policy. And without making a legal case based on their argument, they have only managed to put the program on hold until the Court of Appeal makes a ruling. It is frankly an uphill battle for the GOP-led states, which is unlikely to be successful without legal merit.