Student loan forgiveness: Federal court strikes down Biden’s program


Student loan borrowers are now waiting indefinitely to see if they will receive debt relief under President Joe Biden’s student loan forgiveness program after a federal judge in Texas struck down the program on Thursday, declaring it illegal.

The Justice Department immediately appealed to the 5th US Circuit Court of Appeals. But that case will have to play out before the Biden administration can cancel any federal student loan debt under the program.

While the Biden administration has faced several legal challenges to the student loan forgiveness program since it was announced in August, Thursday’s ruling is the most significant setback yet — prompting the Department of Education to stop accepting applications for accept debt relief.

Biden’s program was already on hold due to a separate legal challenge, but the administration continued to accept applications, having received 26 million so far.

Under the program’s rules, eligible low- and middle-income borrowers can receive up to $10,000 in federal student loan forgiveness and up to $20,000 in cancellation if they also received a Pell grant while enrolled in college.

Lenders will have to wait for the government’s appeal to the 5th Circuit Court to play out. While it can be difficult to keep track of all the various legal challenges, borrowers can sign up for updates from the Department of Education and check the Federal Student Aid website for further information.

Also Read :  Argentina vs Netherlands: 'Aging genius' Lionel Messi looking to inspire La Celeste

It may take months before the court makes a final ruling. If it overturns the Texas lower court’s ruling, the Biden administration could begin canceling student debt.

But the Justice Department could also ask for an emergency stay of the Texas judge’s order. If granted — and if another appeals court ends its temporary stay on the program in a separate, pending case — the administration would be allowed to cancel debt before a final decision is made by the 5th Circuit.

Initially, the Biden administration said it would begin granting student loan forgiveness before payments resume in January after a years-long pandemic hiatus.

But Thursday’s ruling in Texas puts that timeline in jeopardy.

“For the 26 million borrowers who have already given the necessary information to the Department of Education to be considered for debt relief – of whom 16 million have already been approved for relief – the Department will hold on to their information so that it can process their relief quickly one we will prevail in court,” White House press secretary Karine Jean-Pierre said in a statement on Thursday.

“We disagree with the District Court’s ruling on our student debt relief program,” she said.

The Biden administration argued that Congress gave the secretary of education the power to pay down student loan debt broadly in a 2003 law known as the HEROES Act.

Also Read :  Brittney Griner’s appeal rejected by Russian court

But the Texas federal judge found that the law did not provide the executive branch with clear congressional authority to create the student loan forgiveness program.

“The program is therefore an unconstitutional exercise of Congress’s legislative power and must be vacated,” wrote Judge Mark Pittman, who was nominated by then-President Donald Trump.

“In this country we are not governed by an all-powerful executive with a pen and a phone,” he continued.

The Texas lawsuit was filed in October by a conservative group, the Job Creators Network Foundation, on behalf of two borrowers who did not qualify for debt relief.

One plaintiff did not qualify for the student loan forgiveness program because her loans are not held by the federal government and the other plaintiff is only eligible for $10,000 in debt relief because he did not receive a Pell grant.

They argued that they could not express their disagreement with the program’s rules because the administration had not put them through a formal notice-and-comment rulemaking process under the Administrative Procedure Act.

“This ruling protects the rule of law that requires all Americans to make their voices heard by their federal government,” Job Creators Network Foundation President Elaine Parker said in a statement Thursday.

The advocacy group was founded by Bernie Marcus, a major Trump donor and former CEO of Home Depot.

The Biden administration has been barred from canceling any debt since the 8th US Circuit Court of Appeals placed an administrative hold on the program on October 21.

Also Read :  Men's Hoops Gets Big America East Road Win Against Bryant

The appeals court has yet to rule on that lawsuit, which was brought by six Republican-led states. A lower court judge dismissed the lawsuit on October 20, ruling that the states lacked standing to bring the challenge.

The Biden administration faces several other legal challenges to the program. Supreme Court Justice Amy Coney Barrett denied two separate requests to challenge the program.

If Biden’s program is allowed to move forward, individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or households who earned less than $250,000 annually in those years could see up to $10,000 of their federal student loan debt is forgiven.

If an eligible borrower also received a federal Pell Grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.

There are a variety of federal student loans and not all are eligible for relief. Federal Direct Loans, including subsidized loans, unsubsidized loans, parent PLUS loans and graduate PLUS loans, are eligible.

But federal student loans guaranteed by the government but held by private lenders are not eligible unless the borrower applied to consolidate those loans into a direct loan before September 29.

This headline and story has been updated with additional information.


Leave a Reply

Your email address will not be published.

Related Articles

Back to top button