President Biden announced his administration’s much-anticipated plan for student loan forgiveness on Aug. 24, and the online application officially opened on Oct. 17. However, on Oct. 21, the U.S. Court of Appeals for the 8th Circuit issued a pause on debt relief while it reviews a lawsuit filed by six Republican-leaning states, CNBC reported.

                By                    Yaёl Bizouati-Kennedy

CNBC added that the administration “has agreed to hold off on discharging any loans while it awaits a decision.”

Now there is a note on the government’s student aid website that reads, “Application is open, but debt discharge is paused. As a result of a court order, we are temporarily blocked from processing debt discharges.”

However, the message adds, “We encourage you to apply if you are eligible. We will continue to review applications. We will quickly process discharges when we are able to do so and you will not need to reapply.”

While Biden said that 22 million borrowers had already applied, many Americans are left wondering if they should still do so. The answer, according to administration officials, is “yes.”

Indeed, the administration has been quick to rebuke the pause and is urging borrowers to still apply.

Press Secretary Karine Jean-Pierre issued a statement on Oct. 21 saying, “Tonight’s temporary order does not prevent borrowers from applying for student debt relief at studentaid.gov – and we encourage eligible borrowers to join the nearly 22 million Americans whose information the Department of Education already has. It also does not prevent us from reviewing these applications and preparing them for transmission to loan servicers.”

She added, “It is also important to note that the order does not reverse the trial court’s dismissal of the case, or suggest that the case has merit.  It merely prevents debt from being discharged until the court makes a decision.”

Additionally, Education Secretary Miguel Cardona tweeted, “Amid some Republicans trying to block our student debt relief program, we are moving full speed ahead, preparing for implementation so we can deliver relief to borrowers who need it most.”

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As we reported, under Biden’s plan up to $10,000 in federal student debt relief may be offered to borrowers whose income in 2020 or 2021 was less than $125,000 (or $250,000 for households). That figure rises to up to $20,000 in student loan cancellation for Pell Grant recipients.

If you are a dependent student, your eligibility is based on your parental income. Most federal loans are eligible, including undergraduate and graduate direct loans, parent PLUS and grad PLUS loans, and consolidation loans. Also covered are federal family education loan (FFEL) program loans held by ED, Perkins loans held by ED, and defaulted loans, according to studentaid.gov.

Borrowers have until Dec. 31 2023 to apply.

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