Appeals court temporarily blocks Biden's student debt relief plan
AILSA CHANG, HOST:
The Federal Court of Appeals for the 8th Circuit has temporarily blocked President Biden's student loan debt relief plan. Now, that plan was announced back in August, and it would forgive up to $20,000 of student loans for qualifying borrowers. The application for the plan officially opened earlier this week. And before today's 8th Circuit ruling, the administration could have started processing the applications as soon as this Sunday. Well, joining us now to explain more is NPR education reporter Sequoia Carrillo. Hi, Sequoia.
SEQUOIA CARRILLO, BYLINE: Hi, Ailsa.
CHANG: OK. So tell us more about this ruling. What does it say exactly?
CARRILLO: So, first and foremost, this ruling is not an injunction or a full stop by any means. This is a temporary hold while the appeals court gets briefed on the case. And this is the case that experts have been watching. There have been a handful of lawsuits filed by conservative groups trying to stop Biden's debt relief plan, but multiple legal experts have told me that this is by far the strongest one. It was filed by six pretty conservative states, including Missouri and Arkansas, which are home to state-based loan companies that they argued would be hurt by debt cancellation because these companies still manage some very old federal student loans.
And so the state attorneys general are trying to prove that canceling these loans would mean less profit for these state-based agencies. But earlier this week, a judge dismissed the case and said that the case did not have standing. So that just means the plaintiffs were unable to demonstrate concrete harm to these companies. So while this does put a pause on any immediate loan relief, it is still very much a procedural hold, rather than a ruling of any kind.
CHANG: OK. So just to be clear, for now, this is only a temporary stop to the debt relief program. I guess my question is, what happens next?
CARRILLO: Yeah. So now we wait for the appeals court to get read in on the case and to make their decision. It should be a pretty quick turnaround. We should know more by Monday or Tuesday. And if the court then issues an injunction, then the pause is extended, and we wait some more. If it dismisses the case, then the program is back on track to begin any day now.
CHANG: Now, this whole program, this whole loan debt relief program - it was just getting started, right?
CARRILLO: Yes, it was. We've known the details since back in August, but the application officially opened this week. But it was already pretty big. Earlier today in a speech at Delaware State University, President Biden said more than 22 million borrowers had already submitted their application, which is more than half of all qualifying borrowers. So that's a huge number. And the administration had said that they could start changing loan balances as early as Sunday. So that is very much now on hold. And borrowers just have to wait, unfortunately.
CHANG: Is there anything borrowers should do in the meantime?
CARRILLO: If you've already applied for forgiveness, you've kind of done all you can. If you haven't applied yet, the application is still open on studentaid.gov/debtrelief. It takes less than 5 minutes, so you may as well fill it out if you qualify.
CHANG: And do you have any sense of how borrowers are feeling about this latest development so far?
CARRILLO: So I haven't spoken to any in the immediate aftermath since the decision just came down. But the overall sentiment I've heard from borrowers throughout reporting on this plan is that they wouldn't really believe it until they saw their balances change. Borrowers, I would say, have been cautiously optimistic this whole time. But this hurdle is one that many people have been afraid of, but also kind of expected.
CHANG: That is NPR's Sequoia Carrillo. Thank you so much, Sequoia.
CARRILLO: Thank you. Transcript provided by NPR, Copyright NPR.