Blanket Student Loan Forgiveness Blocked By 8th Circuit U.S. Federal Appeals Court

On Friday October 21st, 2022 the U.S. Court of Appeals for the 8th Circuit granted an administrative stay to the blanket student loan forgiveness proposal that was supposed to begin forgiving student loan debt balances starting Sunday October 23rd, 2022.

The stay was in response to an appeal filed by attorneys general for Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina after their case was dismissed in a lower federal district court by U.S. District Judge Henry E. Autrey. The stay was ordered to allow the appellate court some time to review the arguments from the plaintiffs and the current presidential administration before determining if an injunction should be ordered until the appeal is resolved.

The Secretary of the U.S. Department of Education insisted in an op-ed for USA Today on Saturday October 22, 2022 that borrowers should continue to apply for forgiveness on the federal website: https://studentaid.gov/debt-relief/application. The Secretary also affirmed the Department of Education’s intent to continue to process applications and conduct all of the necessary steps to affect the student loan relief with the exception of actually disbursing the funds to adjust borrowers’ student loan balances. The Department of Education has been sending out mass emails to borrowers encouraging them to apply. Similar statements from the President of the United States have reinforced the administration’s view that the administrative stay is only a temporary delay and predict that borrowers should start seeing relief in about 2 weeks.

However, after directing both parties to submit opposition and reply by Monday 10/24/2022 and Tuesday 10/25/2022 respectively, the federal appellate court has given no indication as to how they are going to rule on this case. Many law professors and legal scholars are now weighing in with predictions regarding this case going in both directions. There are also 5 additional cases currently working their way through the courts, challenging the legality of the blanket student loan forgiveness proposal. Only one of those 5 additional cases: Brown County Taxpayers Association v. Biden, has been dismissed by the U.S. Supreme Court.

Although the blanket student loan forgiveness proposal appears to be in legal limbo, student loan payments are still set to resume in January 2023. The federal income-based student loan forgiveness programs that have been around since 1994 are not affected in any way by the outcome of the blanket student loan forgiveness proposal. These programs require income documentation, annual re-certification, and consolidation in some cases. Regardless of the outcome of the legal battle over blanket student loan forgiveness, it is still possible to achieve full forgiveness of the entire balance of your student loan debt through these long standing programs which have been enacted through federal legislation and negotiated rule-making as opposed to executive order.