The plan has faced several legal disputes and is officially on hold after a ruling from an appellate court this week.
On Monday, the U.S. Court of Appeals for the 8th Circuit ruled in favor of a group of six Republican-led states who asked the court to pause any debt forgiveness during its court proceedings. The court issued an injunction that halted the plan. Last month, the court issued an administrative stay to the states, but this week found that at least one state has standing to sue.
U.S. Solicitor General Elizabeth B. Prelogar told the high court in a filing that the “Eighth Circuit’s erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations.”
If the Supreme Court does not get rid of the injunction, Prelogar said it should “set the case for expedited briefing and argument this Term to avoid prolonging this uncertainty for the millions of affected borrowers.”
Last week, Texas U.S. District Judge Mark Pittman ruled that Biden’s plan is illegal, which essentially made it so that the Education Department could not take in additional applications or dismiss any student debt. The Biden administration issued an appeal to the ruling shortly after Pittman’s ruling.
The states at the heart of the case that resulted in the injunction claim that Biden’s plan acts in violation of the separations of power and the Administrative Procedure Act, CNN reported. A district court found that the states would not be successful, but the Eight Circuit reversed the ruling.
The legality and constitutionality of the student loan forgiveness plan is being questioned. It will provide up to $10,000 in debt cancellation for qualifying student loan borrowers who earn less than $125,000 as individuals, or earn $250,000 as a household. Those who obtained Pell Grants could have up to $20,000 canceled. The plan is expected to cost American taxpayers more than $400 billion, per Fox News. The Biden administration has said it will cost around $300 billion.
The Biden administration contends that it does have the legal authority for its plan due to the 2003 Higher Education Relief Opportunities for Students Act (HEROES). The law allows the Education Secretary to get rid of or alter student loan debt in times of war and national emergencies for specific individuals.
According to a summary of the law, such individuals include military service members, people who live or work somewhere that is “declared a disaster area … in connection with a national emergency,” or who have “suffered direct economic hardship as a direct result of a war or other military operation or national emergency.”