The 8th U.S. Circuit Court of Appeals recently blocked President Biden's student loan forgiveness program after Republicans disputed the debt cancellation in court. (iStock)
The U.S. Court of Appeals for the 8th Circuit recently gave an emergency order to temporarily block the Biden administration’s student loan cancelation plan.
Six Republican-led states sued to block President Joe Biden’s student loan forgiveness program that would cancel up to $10,000 in federal loans per borrower and up to $20,000 per borrower for those who used Pell Grants in college.
However, U.S. District Judge Henry Edward Autrey ruled that the states did not articulate the type of harm and rejected their legal challenge for federal court.
"While Plaintiffs present important and significant challenges to the debt relief plan, the current Plaintiffs are unable to proceed to the resolution of these challenges," Autrey wrote in his decision.
But the six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — appealed the decision. And on Oct. 21, the 8th Circuit court granted a temporary block on the forgiveness plan until the appeals process plays out.
If you have private student loans, they do not qualify for federal student loan forgiveness. But you can potentially reduce your monthly student loan payment by refinancing to a lower interest rate. Visit Credible to find your personalized interest rate without affecting your credit score.
WHITE HOUSE RELEASES STUDENT LOAN FORGIVENESS APPLICATION — WHAT TO KNOW
Biden administration encourages borrowers to continue to apply for forgiveness
After the appeals court temporarily halted the debt forgiveness plan, the Biden administration released a statement via the Education Department that encouraged borrowers to continue to apply for forgiveness. Although the administration can’t officially cancel student loans during the halt, it said it is moving ahead with preparing for forgiveness and collecting applications.
"Today’s temporary decision does not stop the Biden Administration’s efforts to provide borrowers the opportunity to apply for debt relief nor does it prevent us from reviewing the millions of applications we have received," Secretary of Education Miguel Cardona said in the statement. "Amidst Republicans’ efforts to block our debt relief program, we are moving full speed ahead to be ready to deliver relief to borrowers who need the help.
"As we continue our preparations in compliance with this order, we continue to encourage working- and middle-class Americans to apply for debt relief at studentaid.gov," he continued.
If you have private student loans and are looking to reduce your monthly payment, you could consider taking out a refinance to lower your interest rate. Visit Credible to compare multiple student loan lenders at once and choose the one with the best interest rate for you.
BIDEN’S STUDENT LOAN FORGIVENESS PLAN — HERE’S EVERYTHING YOU NEED TO KNOW
White House releases student loan forgiveness application
The Biden administration officially launched its student loan forgiveness application in October, which is currently available through an online portal.
Borrowers with federal student loan debt can fill out the simple application that includes questions such as the borrowers' name, Social Security number and email. They then need to confirm their eligibility for student debt relief before submitting the form.
Borrowers have until Dec. 31, 2023, to apply for federal student debt forgiveness.
"As millions of people fill out the application, we’re going to make sure the system continues to work as smoothly as possible so that we can deliver student loan relief for millions of Americans as quickly and as efficiently as possible," Biden said at the time of the launch.
Although private student loan borrowers do not qualify for Biden’s debt forgiveness plan, you could consider refinancing your loan to potentially reduce your monthly payment. To see if this is the right option for you, contact Credible to speak to a student loan expert and get your questions answered.
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at firstname.lastname@example.org and your question might be answered by Credible in our Money Expert column.
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