White House still accepting requests for debt relief even after court suspends program [Video]

On Friday, President Joe Biden provided an update on the launch of his administration’s student loan forgiveness efforts, announcing that in just under a week, nearly 22 million people applied online.

But hours later, a federal appeals court threw the program into limbo with an administrative stay that, for now, prevents the administration from actually going without the loans. The United States Court of Appeals for the Eighth Circuit issued the recess Friday night as it considers a request from six Republican-led states to permanently block the program.

But with legal wrangling over the program now expected to boil over into next week, the White House was quick to assert that borrowers will continue to be able to at least seek relief.

“[W]We encourage eligible borrowers to join the nearly 22 million Americans about whom the Department of Education already has information,” press secretary Karine Jean-Pierre said in a statement.

The decision “also does not preclude us from reviewing these applications and preparing them for transmission to loan servicers,” she added.

Nonetheless, the program and whether approved applications will be completed are now pending a week after the program first went live. The app’s beta for up to $20,000 in loan forgiveness launched Oct. 15, followed by the president’s official unveiling of the sign-up process on Monday.

President Biden delivered a speech on student debt relief at Delaware State University on October 21. (Anna Moneymaker/Getty Images)

Nebraska Attorney General Doug Peterson – one of the state officials suing to stop the program – welcomed the decision in a statement, saying, “It is very important that the legal issues involving presidential power be analyzed. through the court before transferring more than $400 billion in debt to US taxpayers.

A focus on 40 million borrowers

Biden and his top aides, including Education Secretary Miguel Cardona, have consistently urged Americans to sign up. The online form has been noted for its simplicity: asking borrowers for nothing beyond their name, social security number, date of birth, phone number, and email. Some documents may be required later in the process, depending on the form.

“It’s so encouraging to see so many borrowers applying so quickly,” Persis Yu of the Student Borrower Protection Center told Yahoo Finance on Friday ahead of the decision. “I think it speaks to the need for this relief and the desperation of borrowers to get this cancelled.”

Before Friday’s decision, the debt had to be cleared by mid-November at the earliest.

In August, the Biden administration announced a debt cancellation plan that would cancel $10,000 of debt for people earning less than $125,000 and an additional $10,000 for those who received Pell Grants, which go to borrowers with extreme financial needs.

Some critics argue that the plan does not address the fundamental problems that make college so expensive, while others say the plan overstepped the constitutional authority of the executive. Many also noted the high cost of the program, which budget experts say could reach half a trillion dollars depending on how many people sign up.

The White House has said about 40 million Americans could eventually be eligible for a pardon and 60% of them are Pell Grant recipients, who are eligible for additional help.

The question, for Kyra Taylor, a staff attorney who specializes in student loans at the National Consumer Law Center, is: “Are they all aware that they have to apply, that they have to raise their hands and I think that will be an open debate question and it will really trickle down to awareness as we move forward.

The forgiveness process moves forward

If the administration is able to get the pardon process back on track, the Department of Education will review and approve applications on an ongoing basis. Loan servicers are the ones who would then actually execute the forgiveness if this last step in the process were reinstated.

Administration officials chose Delaware State University as the site of Biden’s Friday speech because the historically black university has a student body where more than 75% of students receive a Pell scholarship — and would therefore be eligible for an increased pardon. .

“There is no better example of a university that has changed so many lives,” Biden said Friday.

Biden also criticized his student loan efforts, pointing to Republicans who criticized the program after receiving forgivable loans from the Paycheck Protection Program for Small Businesses. “Who the hell do they think they are?” Biden asked.

The administration’s pardon plan scored two major victories on Thursday when a federal judge in Missouri ruled the six states lacked standing to block the program and the Supreme Court also issued a similar decision in reference to another matter.

“A state court and the Supreme Court said no ‘we’re on Biden’s side,'” the president said Friday.

On Friday, the United States Court of Appeals for the Eighth Circuit granted a temporary victory to officials seeking to block the program from six states: Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. These states argue that Biden’s plan oversteps his executive spending power and threatens future state tax revenues.

A federal judge dismissed the case on Thursday, finding the states lacked standing to sue, meaning they failed to show they would be harmed by the debt relief program. The Eighth Circuit Court of Appeals will now decide whether to affirm that decision.

This post was updated after the Eight Circuit issued an order on Friday suspending the debt relief program.

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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