US appeals court rejects Biden's bid to revive student debt plan

A federal appeals court on Wednesday declined to put on hold a Texas judge's ruling that said President Joe Biden's plan to cancel hundreds of billions of dollars in student loan debt was unlawful.

The New Orleans-based 5th US Circuit Court of Appeals rejected the Biden administration's request to pause a judge's Nov 10 order vacating the US$400 billion (RM1.7 trillion) student debt relief programme in a lawsuit pursued by a conservative advocacy group.

The decision by Fort Worth, Texas-based US district judge Mark Pittman was one of two nationally that has prevented the US Department of Education under Biden from moving forward with granting debt relief to millions of borrowers.

The administration has asked the US Supreme Court to similarly lift an order by the St Louis-based 8th US Circuit Court of Appeals that, at the request of six Republican-led states, had barred it from cancelling student loans.

A three-judge panel of the 5th Circuit in Wednesday's brief order declined to put Pittman's ruling on hold while the administration appealed his decision, but the court directed that the appeal be heard on an expedited basis.

The panel included two Republican appointees and one judge nominated by former Democratic president Barack Obama. Pittman was appointed by former Republican president Donald Trump.

Biden announced in August that the US government would forgive up to US$10,000 in student loan debt for borrowers making less than US$125,000 a year, or US$250,000 for married couples. Students who received Pell Grants to benefit lower-income college students will have up to US$20,000 of their debt cancelled.

During the 2020 presidential campaign, Biden promised to help debt-saddled former college students. Biden's programme has drawn opposition from Republicans, who have portrayed it as shifting the burden of debt from wealthy elites to lower-income Americans.

The Congressional Budget Office in September calculated that the debt forgiveness programme run would cost taxpayers about US$400 billion.

About 26 million Americans have applied for student loan forgiveness, and the US Department of Education had already approved requests from 16 million by the time Pittman issued his ruling.

Pittman ruled in a lawsuit by two borrowers who were partially or fully ineligible for the loan forgiveness who were backed by the Job Creators Network Foundation, a conservative advocacy group founded by Bernie Marcus, a co-founder of Home Depot.

The judge said it was irrelevant if Biden's plan was good public policy because the program was "one of the largest exercises of legislative power without congressional authority in the history of the US."

Pittman wrote that the Heroes Act – a law that provides loan assistance to military personnel and that was relied upon by the Biden administration to enact the relief plan – did not authorise the programme.