EXPLAINER: Where does student loan forgiveness stand?

A federal appeals court in St. Louis has created another roadblock for President Joe Biden’s plan to provide millions of borrowers with up to $20,000 each in federal student-loan forgiveness..

The court on Monday agreed to the preliminary injunction halting the program in one of several cases challenging the debt relief plan.

With the forgiveness program on hold, millions of borrowers have begun to wonder if they will ever be able to repay their debts. The fate of the plan is likely to end up in the Supreme Court.

Here it is:


The debt forgiveness plan announced in August will cancel $10,000 of student loan debt for those making less than $125,000 or households with incomes of less than $250,000. Pell Grant recipients, who typically demonstrate greater financial need, will receive an additional $10,000 in debt.

College students are eligible if their loan is disbursed before July 1. The plan makes 43 million borrowers eligible for some debt forgiveness, with 20 million able to wipe out their debt entirely, according to the administration.

The Congressional Budget Office said the program would cost about $400 billion over the next three decades.

The White House said 26 million people have applied for debt relief, and 16 million people have been granted relief.

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A hold on the plan to get extended

Monday’s decision was made by a panel of three judges from the 8th US Circuit Court of Appeals in St. block the loan forgiveness program.

The decision of the panel made up of three Republican appointees – one appointed by President George W. Bush and two by President Donald Trump – extends the detention until the matter is resolved in court. Previously, the court had been suspended temporarily.

Nebraska Attorney General Doug Peterson, a Republican, said in a statement that the ruling “acknowledges that this effort to forgive more than $400 billion in student loans threatens serious harm to the economy that cannot be undone.”

White House Press Secretary Karine Jean-Pierre said the administration is confident in its legal authority for the student debt relief plan.

“The administration will continue to fight these baseless lawsuits by Republican officials and special interests and will not stop fighting to support working and middle class Americans,” said Jean-Pierre.

A Texas judge found BIDEN overstepped

On Thursday, US District Judge Mark Pittman – an appointee of former President Donald Trump based in Fort Worth, Texas – ruled that the program usurped Congress’ power to make laws.. The administration immediately filed a notice of appeal.

Pittman said the Higher Education Assistance Opportunities for Students Act of 2003, commonly known as the HEROES Act, does not authorize any loan forgiveness programs.

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The law allows the secretary of education to waive or modify the terms of federal student loans in times of war or national emergency. The administration has declared that the COVID-19 pandemic has created a national emergency.

But Pittman said such a massive program would require clear congressional authorization.

The plan has faced another legal challenge. In October, Chief Justice Amy Coney Barrett rejected the appeal from a group of Wisconsin taxpayers. A federal judge previously dismissed the group’s lawsuit, finding they had no legal right, or standing, to bring the case.

TEXAS RULING was a blow to the plan

Pittman’s decision removes the basic legal argument used to justify Biden’s plan. Previously, the White House has been able to dodge legal attacks made in lawsuits by tweaking the details of the program.

One lawsuit argued that automatic debt cancellation would leave borrowers paying heavier taxes in states that impose taxes on canceled debt. The administration responded by allowing borrowers to opt out. Another suit alleges that Biden’s plan would harm financial institutions that receive revenue from certain types of federal student loans. The White House responded by carving that loan out of the plan.

The Texas decision, however, held that the HEROES Act did not provide authority for mass debt cancellation. The law gives the Department of Education broad flexibility during a national emergency, but the judge ruled that it was unclear whether debt cancellation was a necessary response to COVID-19, noting that Biden had recently declared that the pandemic was over.

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Is the case bound for the Supreme Court?

The legal situation is complicated by numerous lawsuits. It is likely that the Texas case and the lawsuit filed by six states will be appealed to the Supreme Court. Before reaching that level, the 5th and 8th Circuit appeals courts — both dominated by conservative judges — would rule separately on each case.

The case before the 8th Circuit could reach the Supreme Court soon now that the panel has granted the injunction sought by six GOP-led states.

Likewise, the administration has indicated it will appeal the Texas decision. If the 5th US Circuit Court of Appeals is asked to block Pittman’s ruling pending an appeal, the losing party could then move to the Supreme Court.

In either case, the appeals court will not issue a final decision on the validity of the program, but on whether it can move forward while the challenge is ongoing.

Meanwhile, the Biden administration is no longer accepting applications for student loan forgiveness.


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