A federal appeals court has blocked President Biden’s student debt cancellation plan, reports the New York Times.
Three judges from the U.S. Court of Appeals for the Eighth Circuit unanimously ruled to put a halt to the government’s plan for canceling student loans. The court is considering a lawsuit brought by six Republican-led states, which claim “that the president’s executive action to wipe out up to $20,000 in federal student loan debt per borrower exceeded his authority.”
Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina all claim that Biden’s cancellation plan would deprive them of tax revenue.
The six-page order also states that the case involves “substantial questions of law which remain to be resolved,” the judges wrote, adding that the proposed legislation “will affect the finances of millions of Americans.”
Last week, a Texas judge struck down Biden’s plan saying it did not have “clear congressional authorization.” That lawsuit was filed by two borrowers who did not qualify for the maximum debt cancellation under that plan, describing it as “irrational, arbitrary and unfair.”
Announced back in August, Biden’s plan sought to cancel $10,000 in debt for those earning less than $125,000 per year and $20,000 for those who had received Pell grants designated low-income families. At an estimate of $400 billion, it has been hailed as one of the most expensive executive actions in history, according to the Congressional Budget Office’s.
Currently, 45 million federal student loan borrowers are scheduled to resume payments on their loans in January, which were paused in March 2020 as a pandemic relief measure.
The Supreme Court is widely expected to take up the case but no announcement has been made yet.
