Court Stays Student Loan Debt Relief

Adam Mast, Staff Writer

The United States Eighth Circuit Court of Appeals has temporarily blocked the Biden administration’s student loan debt relief plan, putting the effort to cancel at least 10,000 dollars in federal loan debt for millions of borrowers nationwide in jeopardy. 

In August, President Biden’s administration announced a comprehensive plan to reduce student debt. Students earning 125,000 dollars or less, or a household income of 250,000 dollars or less, are eligible to cancel up to 10,000 dollars of subsidized or unsubsidized federal student loans. Students who received a Pell grant can receive 20,000 dollars of relief as part of this initiative as well. The administration also announced a final extension to the pause on student loan payments that will continue until December 31, 2022. This pause has been in effect since March 2020.    

After this plan was announced, six states (Arkansas, Missouri, Nebraska, Iowa, Kansas and South Carolina) filed a lawsuit in an attempt to thwart the administration’s plans of moving ahead. The lawsuit argues that Biden’s administration is overstepping its executive power. U.S. District Judge Henry Autrey of Missouri dismissed their case. Immediately after the decision, the six states appealed to the U.S Eighth Circuit of Appeals, and the Eighth Circuit has blocked the program from continuing.

The Biden administration has cited the 2001 HEROES Act in response to the ruling, which empowers the executive branch to alleviate student loan debt amid a national emergency. They argued that the COVID-19 pandemic constitutes such an emergency, empowering them to reduce student debt.  

Students are still eligible to apply for student debt cancellation online, but the rollout of the debt relief is paused while the Circuit court deliberates. At this moment, it is unclear what the court’s decision will be.

This has frustrated many, including Dickinson student Noah Morrison ‘25, who said “I was excited when I heard about Biden’s plans to cancel student debt. The current pause definitely makes me frustrated as to why this program is actively trying to be stopped.”

The U.S Department of Education also announced sweeping new changes to the federal student loan system in addition to their plans for loan relief. The department announced protections for students who have been defrauded by their schools by applying to the borrower defense process. 

The department plans to prohibit institutions that take federal money from preventing class-action lawsuits against them. This will be done by having students sign legally binding waivers. They also announced the elimination of interest capitalization for subsidized federal loans, which can contribute to growing interest rates and debt accumulation. These changes are expected to go into effect in July 2023.