Challenging the legality of President Biden's student loan forgiveness plan
The Biden administration is also working on changes to existing federal student loan repayment plans that aim to make it easier for borrowers to pay for college. These changes are not facing legal challenges. Lawyers for the Biden administration argue that this provision gives the secretary of education the authority to cancel federal student loan debt so that borrowers are not made worse off with respect to their loans by the effects of the COVID-19 pandemic. They cite data that shows borrowers who previously had their payments paused due to an emergency like a hurricane were at a higher risk of default after the pause expired. But plaintiffs argue the Biden administration is abusing its power and using the pandemic as a pretext for fulfilling the president’s campaign pledge to cancel student debt. It’s unclear exactly when the Supreme Court will issue its decision, but typically the justices release their rulings by the end of the current term, which is usually in late June or early July. If the Supreme Court rules that the Biden administration’s student loan forgiveness program is legal and allows it to move forward or if the court dismisses the challenges due to a lack of standing or the legal right to bring the disputes in the first place it’s possible the government will begin issuing some debt cancellations fairly quickly. If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness. Pell grants are a key federal aid program that helps students from the lowest-income families pay for college. Federal Direct Loans, including subsidized loans, unsubsidized loans, parent PLUS loans and graduate PLUS loans, would be eligible for the program.
If Biden’s program is allowed to move forward, individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years could see up to $10,000 of their federal student loan debt forgiven. But federal student loans that are guaranteed by the government but held by private lenders, such as some Federal Family Education Loans, are not eligible unless the borrower applied to consolidate those loans into a Direct Loan before September 29, 2022. Additionally, in July, changes will be made to the Public Service Loan Forgiveness program, which allows certain government and nonprofit employees to seek federal student loan forgiveness after making 10 years of qualifying payments. The changes will make it easier for some borrowers to receive debt forgiveness
Massachusetts Sen. Elizabeth Warren released a report on Monday, exclusively reviewed by Insider, that detailed financial disaster for millions of Americans if the Supreme Court strikes down Biden’s relief, and Congressional Progressive Caucus Chair Pramila Jayapal wrote on Twitter that the lawsuits are the story of right-wing billionaires who are happy to take government subsidies for themselves but don’t want to help working people get relief. Standing is a sort of jurisdictional requirement before a case can even get heard making sure that there’s a real person whose interests are really affected by the challenged government action said Thomas Bennett, an associate professor of law at the University of Missouri. To bring a case in federal court, he said, a plaintiff must be able to demonstrate that they would suffer from concrete harm or injury because of a policy. Experts said the strongest case comes from the state of Missouri, which argues that its loan servicer, the Missouri Higher Education Loan Authority MOHELA, will suffer financially because it will no longer receive millions of dollars in fees for loans forgiven by the programme.
