Another federal court just slammed the brakes on Biden's student-loan forgiveness, keeping debt relief from millions of borrowers

• The 8th Circuit just blocked Biden's student-loan forgiveness plan in response to a lawsuit filed by six GOP-led states.
• This means Biden cannot cancel any student debt while the injunction is in place, pending an appeal.

A court just dealt another major blow to President Joe Biden's student-loan forgiveness plan.

On Monday, the 8th Circuit Court of Appeals ruled an injunction will remain in effect on Biden's up to $20,000 student debt relief plan, meaning the administration cannot cancel borrowers student loans "until further order of this court or the Supreme Court of the United States," per the ruling.

This is a major setback for the administration, along with the over 26 million borrowers who have already applied for relief through the online form at studentaid.gov.

This decision was in response to a lawsuit filed by six Republican-led states who argued the debt relief should be blocked because it would hurt their states' tax revenues, along with that of Missouri-based student-loan company MOHELA, where the lawsuit was filed.

It also comes after a federal court in Texas struck down Biden's debt relief plan, declaring it illegal on November 10. Biden's Justice Department appealed that decision.

At this point, it's unclear what the timeline will be for borrowers moving forward. For now, the Education Department has stopped accepting applications for relief. While the Biden administration is expected to also appeal the most recent court decision, the process could take time and borrowers are still expected to resume student-loan payments in January, after the pandemic pause expires. The Education Department has not yet indicated whether that pause will be further extended, given the injunction on the relief.

Prior to this decision, the department indicated it was moving forward with the debt relief process, and Education Secretary Miguel Cardona said "the Department is reviewing applications and sending approved applications to loan servicers, which are ready to apply the relief to your loans."

Since announcing debt relief, Biden's administration remained confident in its legal authority to enact one-time broad student-loan forgiveness, citing the HEROES Act of 2003, which gives the Education Secretary the ability to waive or modify student-loan balances in connection with a national emergency, like COVID-19. But the Republicans argued the relief is an overreach of that authority, and the scale of relief Biden wants to enact should require Congressional approval.