Where does Biden’s student loan forgiveness plan stand


President Joe Biden’s student loan forgiveness program remains on hold while a federal appeals court hears a challenge filed by six GOP states.

The Biden administration continues to accept applications for student loan forgiveness, which is worth up to $20,000 per borrower, but is currently not allowed to cancel student loan debt due to a temporary administrative stay of the program by the 8th U.S. Circuit Court of Appeals on October 21.

The appeals court will then decide whether to grant the preliminary injunction requested by the states. If approved, the student loan forgiveness program could be suspended while litigation continues and the court hears both sides of the case on the merits. If the injunction is not enforced, debt cancellation can begin during the appeal process.

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

A lower court judge dismissed the lawsuit on Oct. 20, ruling that the states did not have standing to appeal. Superior Court Judge Amy Coney Barrett also dismissed a separate challenge to Biden’s student loan forgiveness program, refusing to hear an appeal filed by a group of Wisconsin taxpayers.

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

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

The Biden administration said Thursday that nearly 26 million people have applied for student loan forgiveness so far. The application opened on October 14.

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

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

Applicants can expect to receive an email confirmation after successfully submitting their application. Borrowers will then be notified by their credit servicer if and when their account is charged off.

Borrowers must apply by December 31, 2023.

If the court allows the administration to forgive student loans, about 8 million borrowers who qualify could have their debt automatically discharged because the Department of Education already has information about their income. Those borrowers can start seeing their debt no sooner than Nov. 15, unless there’s a legal pause at that time.

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

If a qualifying borrower also received a federal Pell Grant while attending college, the individual is eligible for up to $20,000 in debt forgiveness.

There are different types of federal student loans, and not all are eligible. Federal Direct Loans, including subsidized loans, unsubsidized loans, PLUS loans for parents and PLUS loans for graduates, are eligible.

But federal student loans that are guaranteed by the government but held by private lenders are not eligible unless the borrower applies to consolidate those loans into a direct loan by September 29.


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