[Asia Economy Reporter Seongpil Cho] A U.S. court has temporarily halted President Joe Biden's student loan forgiveness policy, which was introduced as a key strategy for the midterm elections.
According to major foreign media, the U.S. 8th Circuit Court of Appeals on the 21st (local time) accepted a preliminary injunction request filed by six Republican-controlled states?Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina?seeking to block the policy's implementation. As a result, President Biden is unable to forgive student loans until the 8th Circuit Court rules on this petition.
This decision came just one day after the U.S. District Court for the Eastern District of Missouri in St. Louis refused to hear the lawsuit filed by these six states. The lawsuit argued that the student loan forgiveness policy, implemented through an executive order, infringes on congressional authority. These states claimed, "President Biden's student loan forgiveness policy threatens state tax revenues and the earnings of state government agencies that invest in student loans." However, Judge Henry Autrey dismissed the states' claims on the 20th, stating that while the objections were "important and meaningful," the states lacked standing to sue.
Following the 8th Circuit Court's decision, the policy scheduled to take effect on the 23rd has been disrupted. President Biden had planned to forgive up to $20,000 (approximately 28 million KRW) per person in student loan debt through an executive order issued in August. The policy aimed to support the younger generation entering society, expand the middle class, and restore social mobility ladders.
The U.S. Congressional Budget Office (CBO) estimated in September that this measure would cost the U.S. government $400 billion (approximately 575 trillion KRW). Conservatives, including the Republican Party, criticized the move as an executive overreach infringing on Congress's budgetary authority and a waste of taxpayer money that harms local public services. On the other hand, social controversies followed, including concerns that increased money supply could worsen inflation and debates over whether it is appropriate to support highly educated individuals with higher income levels.
The White House announced it will continue to accept applications for loan forgiveness despite the court's injunction. White House Press Secretary Karine Jean-Pierre explained that the order does not prevent applications, reviews, or government preparations for student loan forgiveness but only ensures that debts are not erased until the court's final decision.
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