A federal appeals court ordered on Monday that the Department of Education had to temporarily halt implementing President Joe Biden’s August executive order to forgive up to $20,000 of student loan debt per eligible borrower. It’s the latest development in a series of lawsuits that has so far prevented any loan forgiveness from reaching around 26 million borrowers who provided the required information before the online application was shut down last week. “My first reaction is just pure shock,” Cassie Baca, a recent graduate who was set to have a large portion of her loans forgiven under Biden’s program, said via text message. “When I filled out my application and submitted I didn’t even know there was a chance it could even be reversed or halted.” In response to the latest court decision, the Biden administration is considering extending the pause on student loan payments and interest yet again, beyond its current Dec. 31 deadline, according to a report by the Washington Post citing two people with knowledge of the matter.
Uncertainty Continues for Borrowers
The ongoing legal wrangling leaves millions of eligible student loan borrowers—some 95% of those with loans held by the federal government—in a similar state of limbo they’ve been experiencing ever since the pandemic began. In March 2020, the Department of Education paused payments and interest on eligible federal loans. Throughout the pandemic, calls for broad student loan forgiveness gathered momentum. Borrowers waited to see whether President Joe Biden would follow through on his campaign proposal to forgive student loan debt, and were in the dark about if and when student loan repayment would resume. Those questions seemed to be put to rest in August when Biden announced many borrowers with federally-held loans would have up to $10,000 of their student loans forgiven ($20,000 for those with Pell Grants). Additionally, he said that payments would resume in January 2023 after multiple deadline extensions.
White House Optimistic Amid Lawsuits
Lawsuits by forgiveness opponents have cast doubt on the program’s future. A group of six states led by Nebraska sued to stop the plan in federal court, resulting in both the October suspension of application processing and an appeals court’s order on Monday to halt the program while it considered the case. Last Thursday, a federal judge in Texas ruled in favor of two borrowers who sued to stop the program, bringing it to a halt—unless the Biden administration successfully gets a higher court to overturn the decisions. Opponents argue that Biden overstepped his authority as president when he ordered the Department of Education to cancel student debt without a vote from Congress. The administration has countered that a 2003 law called the “HEROES Act” gives the administration the authority to cancel debt all on its own. “We are confident in our legal authority for the student debt relief program and believe it is necessary to help borrowers most in need as they recover from the pandemic,” White House Press Secretary Karine Jean-Pierre said in a statement Monday. Advocates for debtors have called for the resumption of student loan payments to be delayed while the legal battle goes on. “The Biden Administration cannot now resume payments on January 1st,” said Persis Yu, managing counsel of the Student Borrower Protection Center, in a statement last week. “It must use all of its tools to fight to ensure that borrowers receive the debt relief they need.”
