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

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

Supreme Court nominee and U.S. Court of Appeals Judge Amy Coney Barrett on Capitol Hill in Washington on October 21, 2020.

Ken Cedeno | Reuters

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

Judge Amy Coney Barrett refused emergency application block the program launched Tuesday by the Pacific Legal Foundation, a conservative legal group, on behalf of two borrowers in Indiana.

October 20, Barrett refused a similar request from the Brown County Taxpayers Association of Wisconsin.

Barrett is responsible for such filings issued from cases in the 7th U.S. Circuit Court of Appeals, which includes Indiana and Wisconsin.

Friday’s decision has little practical effect. For now, student loan forgiveness remains on hold a challenge passed by six Republican-led states. An 8th Circuit Court of Appeals judge in October granted the state’s emergency request to delay the plan pending the state’s appeal.

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From the White House in August discovered his plan — to cancel $10,000 in student loans for most borrowers and up to $20,000 for those who received Pell Grants for low-income families — faced at least six lawsuits.

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

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

“Practically since this program was announced, the administration has sought to avoid judicial review,” Kruckenberg said. “So far they’ve succeeded. But that doesn’t change the fact that this program is illegal from stem to stern.”

‘Condition’ remains a problem for forgiveness challenges

Experts say the main hurdle for those hoping to thwart the president’s action is finding a prosecutor who can prove the policy has harmed them.

“Such an injury is required to establish what courts call ‘standing,'” Laurence Tribe, a Harvard law professor, recently told CNBC. “No individual, firm or state is visibly harmed in the way that private lenders would be if, for example, their student loans were canceled.”

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

“There were very few substantive differences between their original lawsuit and the new lawsuit, which points to a lack of legal basis,” he said.

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In the Pacific Legal Foundation case, Indiana prosecutors Frank Garrison and Noel Johnson said they would be financially damaged if some of their student debt would be automatically forgiven because they would pay state taxes on that canceled debt.

Indiana is one of several states which said the pardon would be taxable at the state level and potentially county level.

Both Garrison and Johnson are lawyers; Garrison works for the Pacific Legal Foundation and Johnson for the Public Interest Legal Foundation. They are seeking relief through public service loan forgiveness program, which allows those who work for the government or certain non-profit organizations to have their debt canceled after 10 years or 120 payments. PSLF Farewell it is not considered taxable income.

After the initial lawsuit, the Department of Education said borrowers could opt out if they didn’t want their loans forgiven.

Student loan borrowers ‘in limbo’

As legal challenges mount, financial advisers say borrowers are wondering where the student loan forgiveness is.

“Court interference is really concerning because people are looking for certainty about their student loans,” said Ethan Miller, a certified financial planner and founder of Planning for Progress in the Washington, DC area. Miller specializes in student loan clients.

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

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