The U.S. Court of Appeals for the Eighth Circuit on Oct. 21 temporarily blocked the Biden administration’s plan to forgive up to $20,000 of federal student loan debt per borrower. The forgiveness will remain frozen until the court reviews an appeal from six states suing the administration. The states allege the executive branch does not have the power to forgive student loans without the approval of Congress.
The appeal came after U.S. District Judge Henry Autrey ruled that the states did not sufficiently demonstrate that the forgiveness plan harmed them, so they did not, in his view, have the standing to sue. The states argued that the administration’s forgiveness plan would harm their investments and reduce their tax revenues, which was, in their view, a sufficient basis to sue.
The six states (Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina) filed a joint lawsuit against the Biden administration on September 29. The states alleged the administration overstepped its executive authority under the HEROES Act. The states also argued that the Department of Education was legally required to collect student loans and could not stop collecting without congressional approval.
Of the six states, five have Republican trifectas and one (Kansas) has a divided government. All of the states except Iowa have Republican attorneys general.
If the forgiveness plan survives court challenges, it will cancel $10,000 in student loan debt per person for individual tax filers making less than $125,000 or married filers with less than $250,000 in income. Pell Grant recipients are eligible to have an additional $10,000 forgiven under the plan.