Biden administration stops accepting applications for student loan forgiveness – CNBC | Team Cansler

U.S. President Joe Biden is flanked by U.S. Secretary of Education Miguel Cardona as he delivers a speech in the Roosevelt Room at the White House in Washington, U.S., April 24, 2020.

Leah Millis | Reuters

The Biden administration has stopped accepting applications for federal student loan forgiveness after a court struck down the plan Thursday night.

“Courts have issued orders blocking our student debt relief program,” reads a note on the forgiveness application page. “As a result, we are currently not accepting applications. We are attempting to cancel these orders.”

The suspension of the forgiveness program comes shortly after a federal judge in Texas denied President Joe Biden’s executive action in August to forgive up to $20,000 in student debt for tens of millions of Americans.

“In this country we are not governed by an all-powerful executive branch with pen and telephone,” Judge Mark Pittman of the U.S. District Court for the Northern District of Texas wrote in his 26-page decision. Pittman, who was appointed by former President Donald Trump in 2019, sided with the Job Creators Network Foundation, a conservative advocacy group.

More from Personal Finance:
It might be cheaper to eat out on Thanksgiving this year
Here’s the inflation breakdown for October 2022 – in one chart
Here are 4 of the best ways to pay for Christmas gifts

The group had called Biden’s plan “irrational, arbitrary and unfair” and accused the president of exceeding his authority. Her complaint argued that the White House ignored federal procedures by not seeing public comment on its program.

The Biden administration said the Justice Department has already appealed the decision.

“We strongly believe that the Biden-Harris Student Debt Relief Plan is legitimate and necessary to give borrowers and working families breathing room as they recover from the pandemic and ensure they are successful when repayments resume education minister, Miguel Cardona, said in a statement. “Amid efforts to block our debt relief program, we are not resigning.”

The main obstacle for those hoping to legally challenge Biden’s plan was finding a plaintiff who could show they were harmed by the policy.

“Such a breach is required to establish what the courts call ‘standing,'” said Laurence Tribe, a Harvard law professor.

Because of this, Tribe said he was devastated by the Texas judge’s decision.

“Judge Pittman’s decision was about as wrong and strange as any federal court ruling I can recall,” Tribe said. “He erred in deciding the merits without first deciding whether either plaintiff was entitled.”

Obstacles to Biden’s forgiveness plan are rising

The president’s student loan forgiveness plan was already on hold amid a challenge brought by six Republican-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — who also accused the president of exceeding his authority.

A federal judge dismissed the states’ lawsuit, saying that while they presented “important and significant challenges to the debt relief plan,” they ultimately lacked the legal capacity to proceed with the case.

The GOP-led states did not back down after their lawsuit was dismissed. They appealed, asking the court to stay the president’s plan, which was due to begin in October, while their application is considered.

The 8th US Circuit Court of Appeals granted the states’ emergency motion, preventing the Biden administration from beginning student debt forgiveness.

However, the Department of Education had encouraged borrowers to keep asking for forgiveness as its plan had not yet been crushed.

26 million borrowers have applied for forgiveness

On Aug. 24, Biden announced that tens of millions of Americans would be eligible for student loan forgiveness: up to $20,000 if they receive a Pell grant, a type of grant for low-income families, and up to $10,000 if you didn’t.

Long before Biden made his move – under pressure from consumer advocates and other Democrats – Republicans had criticized student loan forgiveness as a handout to wealthy college graduates. They also argued that the President does not have the power to forgive consumer debt without Congress himself.

Not surprisingly, the legal challenges erupted. So far, at least six lawsuits have been filed against the president’s plan.

Originally, the Department of Education had said borrowers would receive forgiveness within six weeks of applying. The full application was launched on October 17, and within three weeks around 26 million people had applied for the relief. To date, 16 million of these applications have been approved.

For now, the department says it will keep applications from borrowers who have already applied.

This is breaking news. Please check again for updates.

Leave a Comment