Student loan debt plan temporarily blocked; administration confident it will move forward
A court rejected a state lawsuit, which was appealed, leading to an administrative stay while it ponders an injunction
Although a federal appeals court temporarily blocked the Biden administration from beginning to cancel student loan debt, Education Department officials continue taking applications for debt relief. White House officials said Saturday they are going “full speed ahead.”
The government is encouraging those with federally held student debt to apply for the relief as soon as possible. Up to $10,000 per eligible student is available for cancellation under the plan. It’s also capped at that amount, so if the balance is lower, so is the relief amount. Those who had Pell Grants could receive up to $20,000 in debt relief. The income cap for receiving the relief is $125,000 for individuals or $250,000 for households.
U.S. News and World Report reported that student loan borrowers average about $30,000 in student loan debt.
NPR reported that when the ruling was made Friday calling a temporary halt, the application portal at StudentAid.gov had already received nearly 22 million applications, which it said was more than half of those qualified to receive debt forgiveness. “The administration could have begun processing applications and changing loan balances beginning Sunday,” the article said.
Implementing the student loan debt relief plan, however, is not a slam dunk.
NPR noted that many “conservative attorneys, Republican lawmakers and business-oriented groups have asserted that Biden overstepped his authority in taking such sweeping action” without asking Congress. “They called it an unfair government giveaway for relatively affluent people at the expense of taxpayers who didn’t pursue higher education.”
Six Republican-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — have sued to stop the debt relief. And the U.S. Court of Appeals for the 8th Circuit issued an administrative stay in one of those lawsuits. The stay is temporary, while it decides whether to grant an injunction. They said that other, nonfederal student loan companies would be hurt by the proposed relief plan.
The case was dismissed by U.S. District Judge Henry Autrey in St. Louis, who said the states had not established standing to sue. The issue was appealed to the court that issued the administrative stay. NPR said the soonest loans could be forgiven is probably mid-November.
Per The Washington Post, “Until Friday, it had appeared that the Biden administration was remaining clear of the legal challenges aimed by Republicans at its debt relief plan. A U.S. district judge had on Thursday dismissed the states’ lawsuit for lack of standing, the same day Supreme Court Justice Amy Coney Barrett denied a separate lawsuit by a conservative legal institute on behalf of a taxpayers’ association, which argued that Biden does not have the authority to waive debt so broadly and that the debt relief was unconstitutional.”
NPR added that “many Democratic lawmakers facing tough reelection contests have distanced themselves from the plan.”
Soothing words for borrowers
Education Secretary Miguel Cardona posted a video Saturday on Twitter in which students with loan debt were assured the administration plans to provide relief. And he pointed out that many of the states suing over student debt relief were “places that accepted PPP loan relief last year” for businesses.
“Tonight’s temporary order does not prevent borrowers from applying for student debt relief at studentaid.gov — and we encourage eligible borrowers to join the nearly 22 million Americans whose information the Department of Education already has,” press secretary Karine Jean-Pierre said in a statement Friday. “It also does not prevent us from reviewing these applications and preparing them for transmission to loan servicers.”
She added, “It is also important to note that the order does not reverse the trial court’s dismissal of the case, or suggest that the case has merit. It merely prevents debt from being discharged until the court makes a decision.”
Whether debt will be canceled before the start of the new year, when student loan payments that have been paused in the pandemic are set to resume, is in question.