Where does Biden’s student loan forgiveness plan stand

Where does Biden’s student loan forgiveness plan stand


President Joe Biden student loan forgiveness program remains on hold while a federal appeals court considers a legal challenge brought by six GOP-led states.

The Biden administration continues to accept applications for student loan forgiveness, which is worth up to $20,000 per borrower, but currently no student loan debt forgiveness is allowed due to temporary, administrative detention put on the agenda by the 8th US Circuit Court of Appeals on October 21.

Then the appeals court will decide whether to grant the preliminary injunction sought by the states. If approved, the student loan forgiveness program could be put on hold while the litigation continues and the court hears from both sides on the merits of the case. If the injunction is not granted, debt cancellation can begin while the appeal is pending.

A decision on a preliminary injunction can come at any time.

Lower Court Judge dismissed the suit on October 20, ruling that the states lacked legal standing to file a challenge. Supreme Court Justice Amy Coney Barrett too refused a special challenge Biden’s student loan forgiveness program, refusing to accept an appeal filed by a group of Wisconsin taxpayers.

Meanwhile, the Biden administration is also facing lawsuits from GOP Arizona Attorney General Mark Brnovich and conservative groups such as the Job Creators Network Foundation and the Cato Institute.

Many of the lawsuits claim that the Biden administration does not have the legal authority to cancel large amounts of student loan debt. But government lawyers argue that Congress gave the education secretary the authority to pay off the debt in a 2003 law known as the HEROES Act.

Nearly 26 million people have applied for student loan forgiveness so far, the Biden administration announced Thursday. The application opened on October 14.

The administration also said Thursday that 16 million applications for loan forgiveness could be approved this week. But borrowers shouldn’t expect their debts to be canceled until an appeals court lifts the program’s stay.

Borrowers can apply online here: https://studentaid.gov/debt-relief/application.

Applicants can expect to receive an email confirmation once their application has been successfully submitted. Then, borrowers will be notified by their loan servicer if and when debt cancellation has been applied to their account.

Borrowers have until December 31, 2023 to apply.

If the court allows the administration to grant student loan forgiveness, an estimated 8 million eligible borrowers could automatically receive debt relief because the Department of Education already has their income information on file. These borrowers could have their debt written off as early as Nov. 15, if there isn’t a statutory break at that time.

If Biden’s program is allowed to move forward, individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who earned less than $250,000 a year in those years could have up to $10,000 of their federal debt forgiven for a student loan.

If the qualified borrower also received a federal Pell grant while enrolled in college, an individual is eligible for up to $20,000 in debt forgiveness.

There are a number of federal student loans, and not all qualify for relief. Federal Direct Loans, including subsidized loans, unsubsidized loans, parent PLUS loans and graduate PLUS loans, are eligible.

But federal student loans guaranteed by the government but held by private lenders are not eligible unless the borrower applies to consolidate those loans into a Direct Loan before Sept. 29.

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