(The hill) – Legal challenges facing the Biden administration over its student loan forgiveness program are leaving borrowers in limbo, as the White House is now forced to halt administration of the program until the Supreme Court rules on it. the case.
Tempers were running high among supporters when the program was announced in August, when Biden promised federal loan forgiveness of $10,000 for those earning less than $125,000 and $20,000 for those earning the same amount and receiving Pell Grants.
While the administration recently notified certain borrowers that they are eligible for forgiveness, it has also indicated that it cannot run the program while the Justice Department fights legal challenges in court, leaving borrowers confused about the status of the forgiveness. promised debt forgiveness. As a result, the administration has also stopped accepting applications for the program.
Here are five things to know about the student loan forgiveness situation.
Court cases delay show
The Biden administration has faced at least six court challenges since it announced the student debt relief program, but only two have been successful in their efforts so far.
A Texas-based Trump-appointed federal judge earlier this month struck down the program, saying Biden had overreached his executive power and it was up to Congress to make such laws.
“In this country, we are not ruled by an all-powerful executive with a pen and a phone. Instead, we are governed by a Constitution that establishes three distinct and independent branches of government,” the judge wrote. The administration has asked the Court of Appeals for the Fifth Circuit to put a hold on that ruling until it files an appeal in that case.
A second successful challenge came from six conservative-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — in the St. Louis-based US Court of Appeals for the 8th Circuit in October.
The states argued that they were hurt by the freeze on student loan payments. A three-judge panel unanimously decided that the show must be paused until further notice from that court or the Supreme Court.
The Biden administration strikes back
The Biden administration has taken action against both of those cases, recently seeking the Supreme Court’s intervention.
“However, we are not going to back down from our fight to give families a break,” Biden said Tuesday as he announced another extension of the pause on federal student loan payments. “That is why the Department of Justice is asking the Supreme Court of the United States to rule on the case.”
In the Texas case, the Justice Department filed a legal petition with the New Orleans-based United States Court of Appeals for the Fifth Circuit, asking it to stay that judge’s order.
The department’s filing with the Fifth Circuit came just a day before it filed a petition with the Supreme Court, asking the high court to set aside the Eighth Circuit’s decision so the Biden administration can run its debt relief program.
“The [8th Circuit’s] therefore, the injunction frustrates the government’s ability to respond to the damaging economic consequences of a devastating pandemic with the policies it has determined are necessary,” US Attorney General Elizabeth Prelogar told the judges.
In addition to hurting the government’s program, the Justice Department argued that the 8th Circuit’s ruling on the program leaves “vulnerable borrowers in an untenable limbo.”
White House press secretary Karine Jean-Pierre said this week that the administration is confident the program will stick, adding that all options are on the table when asked if the White House is implementing plans to contingency.
“We took it to the highest court in the country, as you know, the Supreme Court, because we wanted to get clarification on this quickly. So, we trust that process,” he said Monday.
Loan payment pause extended to next year
After pressure from activist groups, the Biden administration announced Tuesday that it would extend the pause on student loan payments until next year.
The pause, which was set to expire on December 31, has been extended until June 30, and Biden said the extension gives the Supreme Court time to hear the case in his current term.
The payment pause will end “no later than June 30, 2023,” Biden said, because payments will resume 60 days after the Department of Education is allowed to implement the program or the dispute is resolved, which should occur sooner. from the end of June, when the Supreme Court’s term usually ends.
The announcement comes after the administration came under pressure from student loan advocacy groups, which argued that borrowers should not have to pay monthly student loan bills until the courts rule on the legality. of student debt forgiveness.
The student loan payment pause began at the start of the COVID-19 pandemic under former President Trump to provide relief to struggling Americans. It has been extended under the Trump and Biden administrations at least six times.
With the legal roadblocks that have risen against the debt relief program, Biden said he will “never apologize for helping working and middle-class families.”
Forgiveness timeline unknown
Even though the payment pause deadline has been extended to June, a firmer deadline for any court decision is still unknown.
Borrowers could be waiting weeks to months before finding out if Biden’s program will be carried out and any actual debt forgiven.
Meanwhile, the Biden administration has encouraged borrowers to sign up for updates from the Department of Education on the program so borrowers can know when updates are available.
Robert Moran, a former senior policy adviser in President George W. Bush’s Department of Education, predicted that the legal challenges could be resolved in the coming months.
“I think the Supreme Court will rule in February or March, which means that people will start paying in April or May,” he said.
Carl Tobias, a University of Richmond law professor, predicted it could take longer.
“Much currently remains unclear,” he said. “Judges may be waiting to weigh in on more than preliminary rulings and district court opinions before the high court seriously considers any appeals…if that happens, it can take a long time before the issue is resolved.”
The Department of Education is ready to help
More than 23 million people applied for student loan relief before legal limbo halted the program.
Although the Department of Education has had to remove loan forgiveness applications from its website, it still has information on the millions who have moved to apply so far.
Over the weekend, Education Secretary Miguel Cardona announced that borrowers were receiving updates on their applications despite a legal fight telling borrowers whether their federal student loans would eventually qualify for loan forgiveness. debts.
“Your application is complete and approved, and we will cancel your approved debt as long as we prevail in court,” an email to an approved borrower reads.
However, even if an application is approved, no debt relief can be applied to a borrower’s account until the legal challenges that have prevented the program from being administered are resolved.
