Leah Millis | Reuters The Biden administration stopped accepting applications for federal student loan forgiveness after a court struck down the plan Thursday night. “Courts have issued orders blocking the student debt relief program,” according to a note on the forgiveness application page at Studentaid.gov. “As a result, at this time, we are not accepting applications. We are seeking to overturn these orders.” The suspension of the forgiveness program comes shortly after a federal judge in Texas rejected President Joe Biden’s executive action in August to cancel up to $20,000 in student debt for tens of millions of Americans. “In this country, we are not ruled by an all-powerful executive with a pen and a telephone,” Judge Mark Pittman of the U.S. District Court for the Northern District of Texas wrote in his 26-page ruling. Pittman, who was appointed in 2019 by former President Donald Trump, has sided with the Job Creators Network Foundation, a conservative advocacy group. More from Personal Finance: It could be cheaper to dine out on Thanksgiving this year Here’s the inflation breakdown for October 2022 — in one chart Here are 4 of the best ways to pay for holiday gifts The group had called Biden’s plan “absurd, arbitrary and unfair” and accused the president of overstepping his authority. Their complaint alleged that the White House ignored federal procedures by failing to see public comments on its plan. The Biden administration said the Justice Department has already appealed the decision. “We strongly believe that the Biden-Harris student debt relief plan is legitimate and necessary to give borrowers and working families breathing room as they recover from the pandemic and to ensure they succeed when repayment resumes,” said Education Secretary Miguel Cardona. “Amidst efforts to block our debt relief program, we are not backing down.” The main hurdle for those hoping to mount a legal challenge to Biden’s plan has been finding a plaintiff who can prove they have been harmed by the policy. “Such injury is necessary to establish what the courts call ‘standing,’” said Laurence Tribe, a Harvard law professor. For that reason, Tribe said it was dismayed by the Texas judge’s decision. “Judge Pittman’s decision was as wrong and outlandish as any federal court decision I can remember reading,” Tribe said. “He erred in deciding the merits without first deciding whether either plaintiff had standing.”
Obstacles to Biden’s pardon plan are mounting
The president’s student loan forgiveness plan had already been suspended by a challenge from six Republican-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — which also accused the president of overstepping his authority. A federal judge dismissed the states’ lawsuit, saying that while they raised “significant and important challenges to the debt relief plan,” they ultimately lacked legal standing to pursue the case. The GOP-led states did not give up after their lawsuit was dismissed. They filed an appeal and asked the court to halt the president’s plan, which was supposed to begin rolling out in October, while their request is considered. The 8th U.S. Circuit Court of Appeals granted the states’ emergency petition, leaving the Biden administration unable to begin forgiving any student debt. However, the Department of Education had encouraged borrowers to continue applying for forgiveness as its plan had not yet been scrapped.
26 million borrowers have applied for forgiveness
On August 24, Biden announced that tens of millions of Americans would be eligible for student loan forgiveness: up to $20,000 if they received a Pell grant, which is a type of aid available to low-income families, and up to $10,000 if they did not. Long before Biden — acting under pressure from consumer advocates and other Democrats — made his move, Republicans had criticized student loan forgiveness as a handout to wealthy college graduates. They also argued that the president did not have the power to forgive consumer debt on his own without Congress. As expected, legal challenges poured in. So far, at least six lawsuits have been filed against the president’s plan. Initially, the Department of Education had said borrowers would receive forgiveness within six weeks of applying. Full implementation began on October 17, and within three weeks, some 26 million people had applied for the relief. To date, 16 million of these requests have been approved. For now, the department says it will hold the applications of borrowers who have already applied. This is breaking news. Check back for updates.
