This week a second federal court ruling against the president’s one-time student loan forgiveness program dealt another legal blow to the Biden administration.
Biden’s initiative would have provided $10,000 or more in one-time student loan forgiveness to millions of borrowers. But no borrower has been allowed to cancel any loan under the initiative after a series of legal challenges and adverse court rulings against the administration.
Here are the things, and what borrowers need to know about student loan forgiveness status.
8th Circuit rules against Biden administration challenging student loan forgiveness program
The 8th Circuit Court of Appeals on Monday dealt another significant blow to Biden’s comprehensive student loan forgiveness initiative.
The Republican-led coalition of states appealed to the 8th Circuit after a lower court rejected their claims that Biden’s student loan forgiveness program deprives states of revenue through state-affiliated FFELP lenders. In response to the appeal, the 8th Circuit temporarily blocked the student loan forgiveness program as it considered whether to enforce the long-running preliminary injunction. In the interim, lawyers for the Biden administration presented additional evidence that suggested that at least one major FFELP lender, Mohela, was in fact not actively participating in the suit.
But the 8th circuit, a . In Monday’s 3-0 decision, the state sided with the coalition and granted a preliminary injunction “until further orders of this Court or the Supreme Court of the United States”. The court did not decide on the merits of the case, but decided that the parties stand to sue (a major point of contention). The Court also suggested that the suit raised “substantial questions of law that remain to be resolved.” The preliminary injunction blocks the program while the litigation continues.
The ruling follows another Federal Court ruling attacking Biden’s student loan forgiveness program
As a practical matter, the 8th Circuit’s decision may not have immediate effect for borrowers. That’s because the ruling follows a federal court ruling in Texas last week that canceled the program on merit.
In that lawsuit, a conservative non-profit organization argued that the administration did not follow due procedures under the Administrative Procedure Act (APA) for setting up the new initiative. The court found that Biden’s plan was “an unconstitutional exercise of the legislative power of Congress and must be vacated.”
Biden administration will appeal
The Biden administration indicated it would appeal the Texas court’s decision last week. As of this writing, the administration has yet to comment on whether it will appeal the 8th Circuit’s decision.
The White House said, “The president and this administration are determined to help get working and middle-class Americans back on their feet, while our opponents – backed by overwhelmingly Republican special interests – provide much-needed relief to millions of Americans.” sued to prevent him from receiving,” the White House said. Press Secretary Carine Jean-Pierre in a statement last week.
The dispute may eventually end up before the US Supreme Court. While the appeal of the Texas decision will first go before the 5th Circuit Court of Appeals, the administration can appeal the 8th Circuit decision directly to the Supreme Court.
student loan forgiveness application no longer working
As a result of adverse court rulings, borrowers can no longer submit applications for the one-time student loan forgiveness program.
“The courts have issued orders to block our student loan relief program. Consequently, at this time, we are not accepting applications,” reads Message on application website,
The Biden administration had received 26 million student loan forgiveness applications before adverse court rulings. And out of these 16 lakh applications were already approved by the education department. But now, it is not clear when, or whether any of these borrowers will get relief.
Biden may extend student loan payment pause
With Biden’s student loan forgiveness plans cleared by the federal courts, advocates are now turning their attention to the national student loan payment pause, which is set to expire on December 31. The pause – which has also stoked interest and suspended collection efforts – is now in effect from March 2020, following several extensions by President Trump and President Biden over the past three years.
Top Biden administration officials had characterized the latest extension of the student loan stoppage as the “last” such extension. And Biden had tied the resumption of payments to his one-time student loan forgiveness program in January, announcing both during the same press conference.
But with doubts over the future of his one-time cancellation program, advocates are pressing the Biden administration to extend the pay break again. It is not clear whether officials are considering such an extension.
Other Student Loan Forgiveness Programs Will Be Available
While Biden’s one-time student loan cancellation program is in serious trouble, several other loan forgiveness and relief programs are available to borrowers. This includes Public Service Loan Forgiveness (PSLF), a new IDR account adjustment, borrower defense for repayment, and disability discharge. The administration is also working on developing a new income-driven repayment plan, which could provide fresh relief to borrowers next year.
Further Reading Student Loan Forgiveness
Chances are Biden will extend student loan pause – but questions remain
Biden student loan forgiveness plan in trouble: Key points after court rules it’s illegal
Can You Apply for Multiple Student Loan Forgiveness Programs? Yes – with a few caveats
A New, Big Student Loan Forgiveness Initiative Is Ready to Launch—And It’s Not What You Think
Credit: www.forbes.com /