Supreme Court again declines to block Biden’s student loan relief plan

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  • Justice Amy Connie Barrett denied an emergency application brought by the Pacific Legal Foundation to halt federal student loan forgiveness.
  • Barrett is responsible for such applications issued by cases in the 7th US Circuit Court of Appeals.
  • For now, student loan forgiveness is blocked by a separate challenge brought by six GOP-led states after an appeals court judge in the Eighth Circuit granted a stay.
  • Nearly 26 million Americans have already applied for student loan forgiveness.

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The Supreme Court on Friday rejected a second request to block the Biden administration’s student loan debt relief program.

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Justice Amy Connie Barrett denied emergency application to block the program brought on Tuesday by the Pacific Legal Foundation, a conservative legal group on behalf of two borrowers in Indiana.

On October 20, Barrett denied a similar request from the Brown County Taxpayers Association in Wisconsin.

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Barrett is responsible for such applications from cases in the 7th US Circuit Court of Appeals, which include Indiana and Wisconsin.

Friday’s decision has no practical effect. For now, student loan forgiveness has been put on hold by a challenge brought by six Republican-led states. In October an appeals court judge in the 8th Circuit approved the states’ emergency petition to stay the plan to consider the states’ appeals.

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26 million borrowers have applied for student loan forgiveness

Since the White House unveiled its plan in August — canceling $10,000 in student loans for most borrowers and up to $20,000 for low-income families receiving Pell grants — it has faced at least six lawsuits. had to do.

Nearly 26 million Americans have already applied for student loan forgiveness, the White House said Thursday, and the Biden administration has approved 16 million requests. Despite recent challenges, the administration continues to encourage borrowers to apply for relief.

“We are disappointed by today’s denial but will continue to fight the program in court,” Caleb Krukenberg, an attorney with the Pacific Legal Foundation, said in an emailed statement.

“Practically since the announcement of this program, the administration has sought to avoid judicial scrutiny,” Krukenberg said. “So far they’ve been successful. But that doesn’t change the fact that the program is illegal from stem to strict.”

‘Standing up’ to the challenges of forgiveness remains an issue

Experts say the main obstacle for those hoping to thwart the president’s action is a litigant who can prove they have suffered from the policy.

“such injury is necessary to establish that the courts are to be called ‘permanent'” Lawrence Tribe, the Harvard law professor recently told CNBC. “No person or business or state has been injured the way private lenders would have had their loans to students, for example, been canceled.”

In that light, Barrett’s decision to decline the Pacific Legal Foundation’s request is not surprising, said higher education expert Mark Kantrowitz.

“There were very few significant differences between their original trial and the new trial, indicating a lack of legal standing,” he said.

In the Pacific Legal Foundation case, Indiana-based plaintiffs Frank Garrison and Noel Johnson said they would be financially hurt If some of their student loans were forgiven automatically because they would have state taxes on that canceled loan.

Indiana is one of several states that have stated that forgiveness will be taxable at the state level, and potentially at the county level.

Both Garrison and Johnson are lawyers; Works for the Garrison Pacific Legal Foundation and the Johnson Public Interest Legal Foundation. they are the pursuit of relief Through the Public Service Loan Forgiveness Program, which allows those working for the government or specific nonprofits to cancel their loans after 10 years or 120 payments. PSLF Apology not considered taxable income,

After the initial lawsuit, the Education Department said that borrowers can opt out if they don’t want their loans forgiven.

Student loan borrowers ‘in limbo’

As legal challenges mount, financial advisors say lenders wonder where student loan forgiveness lies.

“The intervention of the courts is really troubling because people are looking for certainty as to what is happening with their student loans,” said Ethan Miller, a certified financial planner and founder of Progress Planning in the Washington, D.C., area. . Miller specializes in clients with student loans.

“There was a plan that clearly outlined the steps,” he said. “And yet everyone is put in limbo.”

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