Student Loans: Biden To Appeal Federal Judge Decision To Strike Down Debt Forgiveness Program

Mandatory Credit: Photo by CAROLINE BREHMAN/EPA-EFE/Shutterstock (13465948c)US President Joe Biden delivers remarks on the Inflation Reduction Act and his administration's fiscal policies, at Irvine Valley College, in Irvine, California, USA, 14 October 2022.

A federal judge in Texas struck down the Biden administration’s student loan forgiveness program on Nov. 10, saying that the law “does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program,” according to court documents.

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“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,” a notice on now reads.

Following the decision, Secretary of Education Miguel Cardona said the Biden administration believes the plan is lawful.

“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. The Department of Justice has appealed today’s decision on our behalf, and we will continue to keep borrowers informed about our efforts to deliver targeted relief,” Cardona said in a statement.

It was further explained that for the 26 million borrowers who have already given the Department of Education the necessary information to be considered for debt relief, and for the 16 million who have already been approved, “the Department will hold onto their information so it can quickly process their relief once we prevail in court,” press secretary Karine Jean-Pierre said in a statement.

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Court Decision Latest Issue Facing Student Loan Forgiveness

This represents another hurdle for the program, as on Oct. 21, the U.S. Court of Appeals for the 8th Circuit issued a pause on debt relief while it reviews a lawsuit filed by six Republican-leaning states, as GOBankingRates previously reported.

Judge Mark. T. Pittman, of the U.S. District Court for the Northern District of Texas, argued in his Nov. 10 decision that the HEROES Act — enacted in the wake of the Sept. 11 attacks and providing authority to grant relief from student loan requirements during specific periods — does not allow the administration to implement the student loan program.

“The Program is thus an unconstitutional exercise of Congress’s legislative power and must be vacated,” according to the court documents. “In this country, we are not ruled by an all-powerful executive with a pen and a phone. Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government,” Pittman concluded.

Under the Biden plan, up to $10,000 in federal student debt relief may be offered to borrowers whose income in 2020 or 2021 was less than $125,000 (or $250,000 for households). That figure rises to up to $20,000 in student loan cancellation for Pell Grant recipients. If you are a dependent student, your eligibility is based on your parental income. Most federal loans are to be eligible.

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Borrowers have until Dec. 31, 2023, to apply.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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