Biden’s Student Loans Forgiveness Scheme on Hold Until June 2023

The Biden administration has again suspended the student loans repayment scheme, claiming that the delay will allow courts to rule on the Democrats’ plan to forgive some debt.

It has now been extended until June 30, 2023, marking the eighth time that the US Education Department has delayed requiring student loan repayment. President Joe Biden stated that his student loan forgiveness plan is completely “legal.”

On November 10, a federal judge in Texas dismissed the plan following a lawsuit filed by a conservative group on behalf of two borrowers who did not qualify for all of the program’s benefits.

Days later, a US court of appeals in St Louis, Missouri, granted an injunction against the program requested by six Republican-led states. The White House then petitioned the Supreme Court to overturn the plan.

The program has ceased accepting new applications due to litigation.

Former President Donald Trump appointed the federal judge in Texas, who argued that the Biden administration had illegally bypassed Congress by approving a $400 billion program through a presidential executive order.

In a video posted on Twitter on Tuesday, Mr. Biden blamed Republican special interests and elected officials who were sued to deny this relief even to their own constituents.

“It’s not fair to expect tens of millions of eligible borrowers to resume student debt payments while the courts consider the lawsuit.”

In August, Mr. Biden announced his plan to cancel up to $20,000 (£16,800) in student debt per person, or $10,000 for Americans earning less than $125,000 per year.

According to the General Accountability Office, the moratorium, which began in March 2020, has already cost more than $100 billion in lost student loan repayments and interest.

Over 26 million Americans have applied for student loan forgiveness.

Sixteen million have been approved, but court cases have prevented the Department of Education, which is in charge of student debt, from clearing their records.

Americans collectively owe the US government $1.5 trillion in university loans.

According to court documents, U.S. District Judge Mark Pittman declared the loan forgiveness plan illegal because Biden did not follow federal procedures to allow for public comment prior to the policy’s announcement.

The Job Creators Network Foundation filed the lawsuit in North Texas court in October on behalf of two borrowers who are ineligible for all of the program’s benefits. Those borrowers disagreed with the program’s eligibility criteria, and the lawsuit claimed that they were unable to express their dissatisfaction.

The latest assault on Biden’s loan forgiveness programs comes after the United States Court of Appeals for the Eighth Circuit temporarily halted the program last month in response to a lawsuit filed by six Republican-led states. The Texas lawsuit adds to the growing list of legal challenges to Biden’s loan forgiveness plan, which he announced in August. Borrowers began submitting applications for the program in October.

Republicans and other advocacy groups have since slammed the program as a handout to high-paid professionals. In September, Gov. Greg Abbott signed a letter claiming that student loan forgiveness would harm the working class.

However, people earning more than $125,000 are ineligible for the loan relief program. Eligible applicants are limited to $10,000 in relief unless they are Pell Grant recipients, in which case they can receive up to $20,000 in relief.

According to the Texas Higher Education Coordinating Board, 56% of students who graduated from four-year public universities in 2021 had approximately $25,000 in student debt.

Biden’s decision to forgive more money for low-income students who qualify for federal Pell Grants will have a particularly large impact on low-income borrowers and people of colour, who are more likely to qualify for federal financial aid and have higher levels of student debt.

The US Department of Education closed the online portal for student debt relief on Friday, which had been accepting applications since Thursday evening.

“Courts have issued injunctions against our student debt relief program. As a result, we are not accepting applications at this time. We are attempting to have those orders overturned “According to the website.

According to the Texas lawsuit, Biden’s program violated the Administrative Procedure Act by not allowing for public comment. The lawsuit also claims that the Secretary of Education lacks the authority to implement the program.

One of the plaintiffs, Alexander Taylor, is not eligible for $20,000 in forgiveness because he did not receive a Pell Grant, which is only available to low-income students, and thus will only be entitled to $10,000 off his student loans.

Myra Brown, the other plaintiff, has privately held loans that are no longer covered by Biden’s plan. Previously, commercially held loans like Brown’s could be consolidated into Direct Loans, which meet the eligibility requirements of Biden’s program, but the Education Department changed this policy in response to multiple lawsuits from conservative states.

Brown had previously benefited from a federal loan forgiveness program as the owner of Desert Star Enterprises Inc., according to The Intercept. According to the publication, Brown’s company received a $48,000 business loan, $42,997 of which was forgiven in April as part of the Paycheck Protection Program.