8th Circuit Blocks Student Debt Relief Program Nationwide

ST. LOUIS, Mo. — The 8th U.S. Circuit Court of Appeals issued a nationwide injunction Monday temporarily barring the Biden administration from moving forward with its student loan debt relief program.

In August, President Joe Biden had rolled out a targeted student loan debt relief plan that would enable the U.S. Department of Education to provide up to $20,000 in debt cancellation to Pell Grant recipients and up to $10,000 in debt cancellation to non-Pell Grant recipients.

Borrowers would be eligible for this relief if their individual income was less than $125,000 ($250,000 for married couples).

To ensure a smooth transition to repayment and prevent unnecessary defaults, the president extended the pause on federal student loan repayment through Dec. 31, 2022. 

Borrowers were advised to expect to resume loan payments in January 2023.

But the plan was quickly beset by legal challenges. The 8th Circuit came after the states of Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina argued the loan relief program threatens their future tax revenues, while also circumventing congressional authority.

“The injunction will remain in effect until further order of this court or the Supreme Court of the United States,” a three-judge panel of the appeals court said in its ruling.

The appellate court action follows a ruling Thursday night in which a federal judge in Texas struck down the administration proposal, calling it “unlawful.”

U.S. District Judge Mark Pittman said he did so because Biden did not follow federal procedures to allow for public comment prior to the policy’s announcement.

The Biden administration stopped accepting applications for the program Friday morning. It could now ask the Supreme Court to lift the injunction.

In a statement released in the wake of the 8th Circuit’s decision, White House Press Secretary Karine Jean-Pierre said the administration remains confident in its legal authority to carry out the student debt relief program.

She went on to say the White House continues to believe the program is “necessary to help borrowers most in need as they recover from the pandemic.

“The Administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle class Americans,” Jean-Pierre said.

Dan can be reached at dan@thewellnews.com and @DanMcCue