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- A federal judge in Texas struck down Biden's student-loan forgiveness on Thursday.
- The relief is effectively blocked, and Biden's administration is appealing the decision.
- For now, borrowers are still expected to resume payments after December 31.
President Joe Biden's student-loan forgiveness plan is in jeopardy.
On Thursday, Mark Pittman — a federal judge in Texas appointed by former President Donald Trump — ruled Biden's one-time student-debt cancellation policy illegal. This ruling was the most significant legal setback for the administration so far, as it effectively blocks the Education Department from canceling any student debt and borrowers from submitting online applications for relief. It also throws into question whether the 26 million borrowers who already applied will ever see an up to $20,000 reduction to their loan balances.
The Texas ruling came as the debt relief was already on pause due to a decision from the 8th Circuit Court of Appeals, in response to another conservative lawsuit filed by six Republican-led states who argued the relief would hurt their states' tax revenues. The 8th Circuit has yet to make a final decision on whether it will dismiss the case or continue pausing the relief, but up until the Thursday ruling, borrowers still had the ability to submit applications for debt relief. Now, however, the Education Department has stopped accepting applications.
"We believe strongly that the Biden-Harris Student Debt Relief Plan is lawful and necessary to give borrowers and working families breathing room as they recover from the pandemic and to ensure they succeed when repayment restarts," Education Secretary Miguel Cardona wrote on Twitter on Friday.
"We are disappointed in the decision of the Texas court to block loan relief moving forward," he added. "Amidst efforts to block our debt relief program, we are not standing down."
Where student-loan forgiveness goes from here
Shortly after the Texas ruling, the Education Department said the Justice Department had filed an appeal of the court's decision, which will go to the conservative 5th Circuit. It's unclear what the timing is for that proceeding, along with a forthcoming decision from the 8th Circuit. Both could take months to decide. Still, the case will likely end up at the Supreme Court, which has already dismissed two other conservative lawsuits seeking to halt student-debt relief.
In the meantime, the Education Department said it will hold onto the information student-loan borrowers who already applied for relief have submitted, but borrowers who have not yet applied cannot submit their applications until a court decides the relief is legal.
Amid the uncertainty of when, or if, borrowers will get the debt relief they applied for, student-loan payments are still scheduled to resume after the pause expires on December 31. There's a growing push from advocates to further extend that pause to account for the delay in implementation, but the department has yet to comment on whether a further extension is on the table — it previously said this was the "final" extension for the pandemic — and maintains that the legal challenges to the relief will be dismissed.
"We believe we're going to prevail in court," Anita Dunn, a senior advisor to Biden, told NBC News on Sunday. "And at that point, we will swiftly move to make sure that the over 26 million people at this point who have — whose information this administration has — that we'll move swiftly for loan forgiveness."
source https://www.businessinsider.com/what-happens-student-loan-debt-cancellation-blocked-court-illegal-2022-11