Student loan forgiveness may be dead. This is what’s going on

The Biden administration has stopped accepting applications for the student debt relief it’s announced in augustcalling into question a program that purported to help 40 million borrowers.

The move by the Department of Education came in response to a decision Thursday from US District Judge Mark T. Pittman in Texas, who held that the department did not have the legal authority to offer loan forgiveness on that scale. The White House said it will appeal the ruling.

But Pittman’s ruling only intensified the show’s legal problems. The Eighth Circuit Court of Appeals had already barred the Department of Education paying off any debt while considering a lawsuit brought by six Republican-controlled states.

Here is a brief explanation of how things stand and what issues are involved in the lawsuits filed against the debt relief program.

The ruling was in Texas. Will it affect Californians?

Yes. Pittman “nullified” the entire debt relief program, saying the department usurped legislative power from Congress in violation of the Constitution.

Unless the administration convinces a higher court to overturn Pittman’s ruling, the program is dead.

I have already applied. Will I still receive forgiveness on my loans?

That depends on the outcome of the appeal. White House press secretary Karine Jean-Pierre said Thursday that 26 million borrowers had already applied for and $16 million had been approved for loan forgiveness. He added: “The Department will retain your information so that it can quickly process your relief once we prevail in court.”

What if I haven’t applied yet? Do I still have to?

As of Friday, the department was no longer accepting applications in light of Pittman’s ruling. If his appeal succeeds, he could resume taking apps.

Borrowers who already reported their 2020 or 2021 annual income do not need to apply to qualify for relief, if the program is reinstated. That’s often the case for borrowers enrolled in an income-driven repayment plan.

Didn’t the Supreme Court rule in favor of the loan forgiveness program?

Judge Amy Coney Barrett dismissed the appeals of two of the groups challenging debt relief, but those orders were given in the context of different cases.

Multiple lawsuits have been filed against the loan forgiveness plan, either by conservative interest groups or Republican state officials. While two of them were dismissed because the plaintiffs couldn’t show they were harmed by the program, two others have gained at least some traction.

All of the lawsuits made the same basic claim: that the Department of Education exceeded its statutory authority when it offered general debt relief to borrowers with federal student loans.

The number of borrowers and the amount of dollars involved are enormous. According to the Congressional Budget Office, the program costs taxpayers an estimated $400 billion.

the Department of Justice argueshowever, that the 2003 Law HEROES gave the Department of Education all the authority it needs. The law gives the department the power to “waiver or modify” none requirement for student loans, including those written in federal statutes.

Congress passed the HEROES Act to protect borrowers who were military reservists and National Guard members deployed to fight after the 9/11 terrorist attacks. However, his powers can be used during a “national emergency” as well as in times of war. And the national emergency that President Trump declared at the start of the COVID-19 pandemic has yet to be officially lifted, even though President Biden said (after the loan forgiveness program was announced) that the the pandemic was over.

Because the fundamental question in every lawsuit is whether the plaintiffs have “standing” to sue; in other words, whether they suffered the kind of harm as individuals that entitles them to seek redress in court.

In one case that was dismissed, the only harm alleged by the plaintiffs was the potential cost of the program to all taxpayers. In another, plaintiffs could avoid the harm (an increase in their state taxes) by rejecting a discharge offered by the department.

In the case brought by six Republican-controlled states, US District Judge Henry E. Autrey in Missouri ruled that the alleged injury, a loss of income from investment or student loan servicing agencies, was speculative or independent of state finances. the eighth circuit put that decision on hold and temporarily barred the administration from forgiving any loans while it considers the states’ appeal.

The Texas case had two plaintiffs: Myra Brown, whose loans are private and therefore ineligible for the relief program, and Alexander Taylor, who was eligible for a discharge of up to $10,000, not $20,000, because he had not received a Pell Grant. Pittman ruled that they could sue because they had not been given the chance to advocate for a pardon program that would give them more relief.

What are the criticisms of the Pittman ruling?

Some legal experts said Friday that Pittman made several key errors in deciding that the two borrowers were standing.

“The standing part is totally incorrect and inconsistent with everything that has been said about standing,” said George Washington University law professor Richard J. Pierce Jr., an expert in administrative law. No one can claim standing to sue by arguing that they should have benefited from an agency action, therefore they were harmed because they were not helped, he said.

Scott Anderson, a fellow in Governance Studies at the Brookings Institution, said it’s not that unusual for people to sue because they weren’t allowed to make their case for more help. But that argument only applies “where there was supposed to be [public] notice and comment” before the agency acts, he said.

Pittman’s analysis, Anderson added, “seems fairly generous to plaintiffs in assessing both their procedural harm and their actual harm.”

As to whether the HEROES Act authorizes the debt relief program, Pittman bases his decision in part on the Supreme Court’s decision in West Virginia v. Environmental Protection AgencyA case challenging the EPA’s authority to regulate greenhouse gas emissions of power plants. A divided court in June strengthened its “major issues doctrine,” limiting the power of administrative agencies to take action that has sweeping consequences without specific authorization from Congress.

Pierce said Pittman may be right about that, if the case can overcome its current problems. But he added that numerous judges, usually Trump appointees like Pittman, “are jumping on the leading questions doctrine bandwagon and applying it case after case” to block agency actions they don’t like.

“And the Supreme Court is going to have to do something to control that,” he said, “because it just can’t be used as widely as some justices are using it today.”

Criticism of the Pittman ruling aside, the administration does not have an easy road ahead. The appellate court with jurisdiction over the Texas case, the U.S. Court of Appeals for the Fifth Circuit, is considered conservative, and so may be receptive to arguments made by the conservative legal group that brought the lawsuit, Job Creators Network Foundation. (Idem for the US Supreme Court).

Why didn’t congressional Democrats include debt relief in the Inflation Reduction Act?

Because they didn’t have the votes to pass it. Although Senate rules allowed Democrats to push the bill through with a simple majority vote, it was clear that not all 50 Democrats supported a sweeping debt relief proposal as part of that. climate, energy and health bill.

For example, Sen. Joe Manchin III (DW.Va.) criticized the administration’s debt relief program in September, saying borrowers should have to “earn” loan forgiveness.

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