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Another court blocks Biden's student loan forgiveness plan: "No workable path"

Judge blocks Biden's student loan relief plan
Judge blocks Biden's student loan relief plan 00:21

A federal appeals court on Monday blocked the Biden administration's student loan forgiveness plan, placing yet another obstacle in the way of a program that had promised to forgive up to $20,000 in student debt for about 40 million Americans. 

The ruling from the 8th Circuit Court of Appeals comes in response to a lawsuit jointly filed six Republican-led states that argued the Biden administration was overstepping its executive powers. The litigation also alleged that Missouri's loan servicer would face a "number of ongoing financial harms" if the loans were forgiven and that the other states behind the suit would also see a disruption in revenue to their coffers. 

It marks the second court ruling blocking the White House's debt-relief program since a federal judge in Texas on Thursday blocked the program and declared it "unlawful." 

On Monday, the 8th Circuit ruled that at least one of the states, Missouri, had legal standing to challenge the Biden plan. The ruling noted that Missouri is likely to be harmed if the debt forgiveness plan moves forward because the Missouri Higher Education Loan Authority (MOHELA) would suffer a financial blow "if a substantial portion of its accounts are no longer active" due to the Biden plan. 

That, in turn, would affect Missouri's ability to fund higher education at its public colleges and universities, the ruling said. 

The court said it considered issuing a limited injunction that would only halt the Biden plan in the six states that filed the lawsuit, but said that would be "impractical." MOHELA, it noted, is one of the largest nonprofit student loan secondary markets in the U.S., servicing $168.1 billion in student loans. 

"Given MOHELA's national role in servicing accounts, we discern no workable path in this emergency posture for narrowing the scope of relief," the court stated. 

Texas federal judge blocks Biden’s student loan forgiveness plan 00:31

The Biden administration can appeal the decision to the Supreme Court. 

The Department of Education didn't immediately return a request for comment. White House Press Secretary Karine Jean-Pierre on Monday said the administration is "confident in our legal authority for the student debt relief program." She added that the White House plans to "continue to fight these baseless lawsuits by Republican officials and special interests."

The decision comes after the 8th Circuit Court of Appeals in October temporarily blocked the student loan forgiveness program in response to an emergency motion brought by attorneys for the six Republican-led states. 

26 million applicants

The court decisions on Thursday and Monday leave 26 million people who have applied to the debt-relief program in limbo. After Thursday's ruling, the Biden administration stopped taking applications for its student debt forgiveness program. 

The Biden administration appealed the Thursday ruling from U.S. District Judge Mark Pittman, who was appointed by former President Donald Trump, declared the program "unlawful." 

Borrowers are facing a financial deadline, with the student debt repayment hiatus currently in place slated to expire in December, and repayments set to restart in January. If the cases aren't resolved before then, millions could be on the hook for repayments that they may not have anticipated.

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