Biden student loan debt forgiveness plan suffers another setback

A federal appeals court on Wednesday declined to shelve a lower court’s ruling blocking President Biden’s student debt relief plan as the administration’s full appeal proceeds.

The decision from the New Orleans-based U.S. Court of Appeals for the 5th Circuit marks the second appeals court to issue a setback to the policy, effectively halting the plan that gives federal borrowers making less than $125,000 per year up to $10,000 in debt relief, with additional relief for Pell Grant recipients.

The three-judge panel, who were appointed by presidents from both parties, in a brief Wednesday night order declined to block a Texas-based trial judge’s decision last month ruling that Biden overstepped his power in developing the plan.

The panel also ordered the administration’s full appeal to be considered in an expedited manner.

Following the lower court’s ruling, the Biden administration stopped accepting student loan forgiveness applications while insisting the plan is legal.

After the St. Louis-based 8th Circuit Court of Appeals blocked the plan in a separate case, the Justice Department last month asked the Supreme Court to lift the decision, arguing debt holders were left in limbo.

That lawsuit was filed from six GOP-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — arguing they were harmed by the policy.

Several other legal challenges have been filed against the student debt plan but have yet to find success in the courts.

Justice Amy Coney Barrett previously rejected two cases seeking emergency relief from the Supreme Court, but the justices may be more inclined to do so now because the federal government is the one seeking relief and the different decisions reached by various courts.

The Biden administration had planned to end a pause in federal student loan payments at the end of the year, but the president decided last week to extend the pause until no later than June 2023 amid legal challenges.

“I’m confident that our student debt relief plan is legal. But it’s on hold because Republican officials want to block it,” Biden said in a statement announcing the extension.

The loan payment pause was first put in place by the Trump administration in March 2020 as COVID-19 cases rapidly spread across the country, and the pause has since been extended under both the Trump and Biden administrations.

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