What’s next for Biden’s student loan forgiveness plan? – NBC Connecticut
Millions of Americans celebrated when President Joe Biden in August announced up to $20,000 in federal student loan forgiveness – but now that decision has faced setbacks in federal court, leaving borrowers wondering if they will ever see relief.
A Texas-based judge ruled Thursday that Biden’s loan relief plan exceeded his level of authority and required congressional approval.
Biden’s student loan forgiveness plan would allow borrowers with incomes below $125,000 to have up to $20,000 of debt erased.
Since the announcement in August, 26 million people have applied for student debt relief, according to the White House.
The app has now been taken offline in light of the recent court ruling.
A Federal Reserve study shows nearly a third of black families have student loan debt. The study also shows that nearly one-fifth of Hispanic families also have student loan debt. Brookings Institution senior fellow Andre Perry joins LX News to discuss how the student debt crisis is affecting America’s racial wealth gap.
Why is student loan forgiveness facing a setback?
The Justice Department filed an appeal on behalf of the Biden administration against U.S. District Judge Mark Pittman, whose decision led to the program’s latest hiatus.
This is the second case of legal pushback against loan forgiveness.
In October, the 8th United States Circuit Court of Appeals suspended the relief plan after six states filed suit.
Republican-led states of South Carolina, Kansas, Missouri, Arkansas, Nebraska and Iowa filed an opposition lawsuit in September.
Biden’s plan hinges on the HEROES Act, or Higher Education Relief Opportunities for Students Act of 2003.
The HEROES Act allows student loan terms to be changed or waived in times of national emergency or war, reports the Associated Press.
The two opposing cases — from Judge Pittman of Texas and the six states — argue that the COVID-19 pandemic is no longer a state of emergency.
“We are disappointed with the Texas court’s decision to block loan relief. Amid efforts to block our debt relief program, we are not backing down,” Education Secretary Miguel said. Cardona in a statement this week.
So where does that leave student borrowers?
What does this mean for student loan borrowers?
Student loan borrowers are essentially at a standstill as the case floats through the court system.
The case will likely end up in the Supreme Court on appeal, reports the Associated Press.
Student loan repayments are expected to resume on January 1, 2023.
Can Americans still apply for student loan forgiveness?
The request has been removed from the federal student aid website. The Ministry of Education says it will retain applications from those who have already applied.
The website reads: “The courts have made orders blocking our student debt relief program. Therefore, at this time, we are not accepting applications. We are seeking to overturn these orders.”
The agency encourages borrowers to sign up to receive updates in the meantime.
The Associated Press contributed to this report.
The Biden administration announced a student debt relief plan on Wednesday that included several components, such as up to $20,000 in debt relief for millions of American borrowers. Have more questions about student loans and Biden’s decision? Senior economic policy reporter Ayelet Sheffey joins LX News for a chat.