Student loan forgiveness: Biden administration dealt another setback in court in effort to revive student loan debt relief policy



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A second federal appeals court has rejected the Biden administration’s bid to stay a ruling blocking the President’s student debt relief policy.

The 5th U.S. Circuit Court of Appeals ruled Wednesday night that it will not pause a ruling from a Texas judge that blocked the policy while an appeal of the decision is played out.

The move sets the stage for the US Justice Department to take the case to the US Supreme Court, which has been considering a separate request from the Biden administration that it reverse an order from the US 8th Circuit Court of Appeals that blocked the loan forgiveness program.

The 5th Circuit’s denial was handed down by a panel made up of George W. Bush appointees, Barack Obama appointees and Donald Trump appointees.

They did not explain their reasons for denying the administration’s request, but the panel ordered the full appeal to be considered urgently.

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Nearly two weeks ago, the Biden administration began notifying people who were approved for federal student loan relief, and even the future of that relief remains in limbo since a lower court blocked the program nationwide. An email from the U.S. Department of Education to borrowers acknowledged recent legal challenges have kept the administration from discharging the debt.

Biden’s program would offer up to $20,000 in debt relief to millions of qualified borrowers, but it has faced legal challenges.

A November 10 Texas ruling upheld by an appeals court on Wednesday declared Biden’s program invalid. That prompted the Department of Education to stop accepting loan aid applications.

About 26 million people had applied for student loan loans before the recent court ruling with 16 million of those applications approved, according to the Biden administration.

Federal student loan payments that have been paused during the Covid-19 pandemic are set to resume in January. But the Biden administration again extended the moratorium on November 22 as the legal battle continued.

The payment pause will be up to 60 days after the litigation is resolved. If the program has not been implemented and the litigation has not been resolved by June 30, payments will resume 60 days after that, according to the Department of Education.

“I strongly believe that my plan is valid,” said President Joe Biden in a video posted on Twitter last week, referring to his student loan forgiveness program.

“But it’s unfair to ask tens of millions of eligible borrowers for relief to continue paying off their student loans while the court considers the lawsuit,” he added.

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The Biden administration said Congress gave the education secretary the power to broadly write off student loan debt under a 2003 law known as the HEROES Act, which was passed after the Sept. 11 terrorist attacks.

Government lawyers say the law allows the secretary to write off debt during national emergencies, including the Covid-19 pandemic.

But a Texas federal judge found that the law did not provide congressional authorization for the executive branch to create a student loan forgiveness program.

“The program is an unconstitutional exercise of Congress’ legislative power and must be vacated,” wrote Judge Mark Pittman, who was nominated by then-President Trump.

“In this country, we are not ruled by a powerful executive with a pen and a phone,” he said.

The Texas lawsuit was filed by a conservative group, the Job Creators Network Foundation, in October on behalf of two borrowers who did not qualify for debt relief.

One plaintiff did not qualify for the student loan forgiveness program because his loans were not held by the federal government and the other plaintiff was only eligible for $10,000 in debt relief because he did not receive a Pell grant.

They argued that they could not voice their disagreement with the program’s rules because the administration did not put them through the notice-and-comment rulemaking process under the Administrative Procedure Act.

“This ruling upholds the rule of law that requires all Americans to be heard by their federal government,” said Elaine Parker, president of the Job Creators Network Foundation, in a statement following the ruling on November 10.

The advocacy group was founded by Bernie Marcus, a major Trump donor and former CEO of Home Depot.

If Biden’s program is allowed to go forward, individual borrowers who earn less than $125,000 in 2020 or 2021 and married couples or heads of households who make less than $250,000 annually in those years could see up to $10,000 of their federal student loan debt written off. forgiven

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

There are different types of federal student loans and not all are eligible 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 borrowers apply to consolidate those loans into Direct Loans before September 29.

This story has been updated with additional background information.



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