Biden Student Loan Forgiveness Plan Survives Multiple Court Challenges — But Legal Battles Continue

Biden Student Loan Forgiveness Plan Survives Multiple Court Challenges — But Legal Battles Continue

In a victory for borrowers, the Biden administration has defeated multiple legal challenges to its new student loan forgiveness initiative. But the fight is far from over.

Biden’s plan would cancel up to $20,000 in student loan debt for up to 40 million borrowers. To be eligible, borrowers must have earned less than $125,000 (or less than $250,000 if they are married) in either 2020 or 2021. Only government-held federal student loans qualify for the relief.

Here’s the latest.

Biden Administration Wins Several Early Court Battles Over Loan Forgiveness Plan

The Biden administration notched a string of victories this week against various parties seeking to block the program:

  • On Thursday, U.S. Supreme Court Justice Amy Coney Barrett rejected an emergency appeal from a conservative organization seeking to block the program. The suit had previously been dismissed by a federal District Court judge for lack of standing.
  • On Friday, a federal judge in Missouri dismissed a suit brought by a coalition of Republican-led states arguing that the student loan forgiveness plan would deprive states, and state-affiliated FFELP participants such as MOHELA, of revenue. Legal observers had viewed this suit as one of the more potent challenges to Biden’s plan. The states are appealing the ruling.
  • Also on Friday, a federal judge in Indiana dismissed a suit brought by a conservative legal organization arguing that the student loan forgiveness plan should be blocked because of potential state tax implications. The Plaintiffs are appealing.

Advocacy organizations for student loan borrowers celebrated the initial victories.

“Americans are happy to hear that working and middle-class people were put above the profits of student loan companies and the partisan aspirations of some Attorneys Generals,” said Natalia Abrams, Student Debt Crisis Center President in a statement. “Student debt cancellation is about repairing the harm caused by the pandemic, inflation, and a higher education system that has been broken for far too long. With today’s decision, we have cleared another unnecessary hurdle to getting much-needed relief to families across the country.”

“With today’s decision, millions of student loan borrowers are one step closer to getting the student loan relief they desperately need and that President Biden has promised to deliver,” said Student Borrower Protection Center deputy executive director and managing counsel Persis Yu in a statement. “This politically and profit-motivated effort to halt President Biden’s historic plan to deliver vital relief has failed, preserving debt relief for working and middle-class families as they recover from the pandemic.

Legal Battles Over Student Loan Forgiveness Are Far From Over

While the Biden administration has won several early court battles over the student loan forgiveness initiative, litigation continues.

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The challengers have filed appeals at both the 7th Circuit and 8th Circuit courts of appeals, and they continue to request injunctions that could block the program while the legal fight plays out. Additional court hearings on other suits are scheduled for next week. If just one court issues a ruling to block the program, it could upend the Biden administration’s plans.

Borrowers Rushing to Submit New Student Loan Forgiveness Application

Millions of borrowers are rushing to submit the new online student loan forgiveness application, which went live earlier this week after an initial beta launch.

“Working people” will benefit the most from student loan forgiveness, said President Biden during a press conference on Monday. “Ninety percent of [the] relief will go to people making less than $75,000 per year.”

In follow-up comments on Friday, Biden said that 22 million borrowers have already applied for relief. The Education Department has indicated that the soonest any student loan forgiveness will be approved would be on October 23.

Further Student Loan Forgiveness Reading

Applying For Student Loan Forgiveness? Don’t Make These 3 Mistakes

Biden Launches Student Loan Forgiveness Application, Says 8 Million Have Already Applied

In Reversal, Biden Administration Announces New Eligibility Limits On Student Loan Forgiveness

Only Two Weeks Left To Apply For Student Loan Forgiveness Under Expiring Waiver Program

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