Student Loan Forgiveness

A Federal Judge Blocked President Biden's Plan for Student Loan Forgiveness, So What's Next?

"We are disappointed in the decision of the Texas court to block loan relief moving forward," the U.S. Secretary of Education said Friday.

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Millions of Americans celebrated when President Joe Biden announced in August up to $20,000 in federal student loan forgiveness — but now the move has faced setbacks in the federal courts, leaving borrowers wondering if they'll ever see relief.

A Texas-based judge ruled Thursday that Biden's loan relief plan exceeds his level of authority and needs Congressional approval.

Biden's student loan forgiveness plan would allow for borrowers with an income under $125,000 to have up to $20,000 of debt erased.

Since the announcement in August, 26 million people have applied for the student debt relief, according to the White House. 

The application has now been taken offline in light of the court's recent ruling.

A study from the Federal Reserve shows that almost one-third of Black families carry student loan debt. The study also shows that almost one-fifth of Hispanic families also carry student loan debt. Andre Perry, a Senior Fellow at the Brookings Institution joins LX News to discuss how the student debt crisis affects the racial wealth gap in America.

Why is Student Loan Forgiveness Facing Pushback?

The Department of Justice has filed an appeal on behalf of the Biden Administration against U.S. District Judge Mark Pittman, whose ruling led to the most recent pause of the program. 

This is the second case of legal pushback against loan forgiveness. 

In October, the 8th U.S. Circuit Court of Appeals issued a hold on the relief plan after six states filed a lawsuit. 

The Republican-led states of South Carolina, Kansas, Missouri, Arkansas Nebraska and Iowa, filed the suit in opposition in September. 

Biden’s plan hinges on the HEROES Act, or Higher Education Relief Opportunities for Students Act of 2003.

The HEROES Act allows for student loan terms to be modified or waived in time of national emergency or war, the Associated Press reports. 

Both cases of opposition — from Texas’ Judge Pittman and the six states — argue the COVID-19 pandemic is no longer a state of emergency. 

"We are disappointed in the decision of the Texas court to block loan relief moving forward. Amidst efforts to block our debt relief program, we are not standing down," Secretary of Education Miguel Cardona said in a statement this week.

So, where does this leave student loan borrowers? 

What Does This Mean for Student Loan Borrowers?

Student loan borrowers are basically at a standstill as the case floats through the court system.

The case will likely end up in front of the Supreme Court on appeal, the Associated Press reports.

Student loan payments are set to resume Jan. 1, 2023.

Can Americans Still Apply for Student Loan Forgiveness?

The application has been pulled from the federal student aid website. The Department of Education says it will retain the applications of those who've already applied.

The website reads, "Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders."

The agency is encouraging borrowers to sign up to receive updates in the meantime.

The Associated Press contributed to this report.

The Biden administration on Wednesday announced a student loan debt relief plan that included several things such as up to $20,000 in debt relief for millions of American borrowers. Have more questions about student loans and Biden's decision? Insider Senior Economic Policy Reporter Ayelet Sheffey joins LX News to discuss.
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