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Nearly 26 million Americans have applied for student loan forgiveness, and the Biden administration has already approved 16 million of those applications, the White House announced Thursday.
Still, his entire loan cancellation plan could be in jeopardy due to legal challenges brought by Republicans, he warned.
“If Republican officials get their way, the monthly costs for tens of millions of Americans will rise dramatically when student loan repayments resume next year,” according to an administration statement.
“Working and middle-class Americans who could have up to $10,000 or $20,000 of their student debt relieved under the Biden administration’s plan will remain burdened with loan debt – preventing them from pursuing the dream of becoming a homeowner, saving for retirement, or starting a small business.”
Temporary suspension of pardon still in place
Since the White House unveiled its plan in August to forgive $10,000 for most student borrowers and up to $20,000 for those who received grants for low-income families, it has faced at least six prosecutions.
More recently, a six-state GOP-led legal challenge temporarily prevented the administration from beginning to write off debt for borrowers. Although their lawsuit was dismissed by a federal judge in Missouri earlier this month, the states – Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina – have appealed.
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U.S. District Judge Henry Autrey in St. Louis ruled earlier this month that while the states had raised “significant and significant challenges to the debt relief plan,” they ultimately lacked the legal standing. to pursue the case.
Experts say the main hurdle for those hoping to thwart the president’s action has been finding a plaintiff who can prove he was wronged by the policy.
“Such an injury is necessary to establish what the courts call ‘standing,'” said Harvard law professor Laurence Tribe. “No individual, company or state is manifestly harmed as private lenders would have been if, for example, their student loans had been cancelled.”
The GOP-led states did not give up after their lawsuit was dismissed. They appealed and asked the court to put the president’s plan, which was supposed to start rolling out last month, on hold while their claim is considered. The 8th U.S. Circuit Court of Appeals granted the states’ emergency motion, leaving the Biden administration unable to begin canceling any student debt just yet.
Effort by GOP-led states is ‘strongest lawsuit’
In their challenge, the states accuse President Joe Biden of overstepping his authority. They also say the action would cause some private lenders to lose business because it would cause millions of borrowers whose federal loans are held with these companies to consolidate their debt into the main federal student loan program. The U.S. Department of Education said borrowers who hold these FFELs, or Federal Family Education Loans, can take this step to qualify for its relief.
The Department for Education, in order to protect its broader loan cancellation policy, said FFEL borrowers must have consolidated their loans by the end of September to be eligible. They can no longer do it to qualify.
This will make it harder for GOP states to argue that the president’s plan will cost private lenders a sizable amount of business, higher education expert Mark Kantrowitz said.
“The state attorneys general trial was the strongest of the trials until the U.S. Department of Education cut the rug by eliminating their legal status,” Kantrowitz said.
Tribe agreed and said the other challengers were also on shaky legal status.
“They represent a group of litigants looking for a theory,” Tribe said. “But at the end of the day, it’s the merits that count, and there’s little merit in their challenge.”
For now, having a student loan forgiveness in the balance could actually help the Biden administration and Democrats in the midterm elections, experts say.
“Borrowers may worry about whether forgiveness will happen,” Kantrowitz said. “It might encourage more of them to vote.”
If Democrats retain control of the House and win Senate seats, he said, they could pass legislation canceling student debt.