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Appeals court puts student loan relief program on hold

Iowa among states appealing after judge rejected lawsuit

Appeals court puts student loan relief program on hold
President Joe Biden speaks Oct. 17 about the student debt relief portal beta test as Education Secretary Miguel Cardona listens in the South Court Auditorium on the White House complex in Washington. (AP Photo/Susan Walsh)

ST. LOUIS — A federal appeals court late Friday issued an administrative stay temporarily blocking President Joe Biden's plan to cancel billions of dollars in federal student loans.

The Eighth Circuit Court of Appeals issued the stay while it considers a motion from six Republican-led states including Iowa to block the loan cancellation program.

The stay ordered the Biden administration not to act on the program while it considers the appeal. But the order came just days after people began applying for loan forgiveness, so it was not clear yet how the stay would impact those have already applied.

The court set a deadline of 5 p.m. Monday Iowa time for a response from the Biden administration and a 5 p.m. Tuesday deadline for any reply from the appellants.

A notice of appeal to the Eighth U.S. Circuit Court of Appeals was filed by the states late Thursday, hours after U.S. District Judge Henry Autrey in St. Louis ruled that since the states of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina failed to establish standing, "the Court lacks jurisdiction to hear this case."

Speaking at Delaware State University, a historically Black university where the majority of students receive federal Pell Grants, Biden on Friday said nearly 22 million people have applied for relief so far.

The plan would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, will get an additional $10,000 in debt forgiven.

The Congressional Budget Office has said the program will cost about $400 billion over the next three decades. James Campbell, an attorney for the Nebraska attorney general's office, told Judge Autrey at an Oct. 12 hearing that the administration is acting outside its authority in a way that will cost states millions.

The cancellation applies to federal student loans used to attend undergraduate and graduate school, along with Parent Plus loans. Current college students qualify if their loans were disbursed before July 1. The plan makes 43 million borrowers eligible for some debt forgiveness, with 20 million who could get their debt erased entirely, according to the administration.

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According to the White House, over 400,000 Iowa borrowers would see some student loan debt forgiven. Of those, nearly 250,000 are Pell Grant recipients and are eligible for up to $20,000 in aid.

Conservative attorneys, Republican lawmakers and business-oriented groups have asserted Biden overstepped his authority in taking such action without the assent of Congress. They called it an unfair government giveaway for relatively affluent people at the expense of taxpayers who didn't pursue higher education.

Biden on Friday blasted Republicans who have criticized his plan, saying "their outrage is wrong and it's hypocritical." He noted that some Republican officials had pandemic relief loans forgiven.

The six states sued in September. Lawyers for the administration said in a court filing that the 2003 Higher Education Relief Opportunities for Students Act, or HEROES Act, allows the secretary of education to waive or modify terms of federal student loans in times of war or national emergency.

"COVID-19 is such an emergency," the filing stated.

Other lawsuits also have sought to stop the program. On Thursday, Supreme Court Justice Amy Coney Barrett rejected an appeal from a Wisconsin taxpayers group seeking to stop the program. Barrett, who oversees emergency appeals from Wisconsin and neighboring states, did not comment in turning away the appeal from the Brown County Taxpayers Association.