Another federal court scraps Biden’s student loan forgiveness plan

The federal appeals court comes after six conservative states, including Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina, filed a lawsuit arguing Biden’s loan-cutting plan is hurting state revenues. The three-judge panel of the Court of Appeals issued a statewide injunction on the plan, meaning the Biden administration cannot cancel debt under the one-off program.

“The injunction will remain in effect pending further orders from this court or the United States Supreme Court,” the appeals court judges wrote in the decision.

The judges, all appointed by Republican presidents, say the state of Missouri has legal standing to challenge Biden’s debt relief program over revenue that could be missing out on MOHELA, a federal student loan servicer.

“MOHELA is alleged to derive revenue from the accounts it services, and the total revenue MOHELA receives back will decrease if a substantial portion of its accounts are no longer active according to the secretary’s plan,” the decision reads . “This unexpected financial downturn will prevent or delay Missouri from funding higher education at its public colleges and universities.”

The decision comes just days after a Texas federal district judge ruled that the plan was unlawful. The Biden administration immediately appealed this ruling and is now going to the 5th Circuit Court of Appeals.

Since Biden announced his student loan forgiveness plan in late August, he has been plagued by lawsuit after lawsuit from conservative and libertarian groups who say widespread forgiveness is unfair. Some of the lawsuits have been dismissed, including by the US Supreme Court.

The judgments and subsequent appeals have prevented tens of millions of borrowers from forgiving up to $10,000 to $20,000 in federal student loans. About 16 million borrowers applied and had their applications processed for forgiveness before the US Department of Education had to shut down the application portal last week. The White House says about 40 million borrowers would qualify for forgiveness under the parameters set for the program.

Borrowers are now confused about what will happen to their loans and how much they will owe in January when federal payments are due to resume after the COVID-19 payment pause.

The Biden administration is still working to forgive student loan debt in other ways, including by revamping the government loan forgiveness program and accelerating relief for borrowers cheated by their colleges.