Court cases bring student debt relief to standstill

The U.S. Department of Education removed student loan forgiveness applications from its website after a judge blocked President Joe Biden’s debt cancellation plan Friday. U.S. District Judge Mark Pittman of Texas said that the administration overstepped its authority in releasing the guidelines. On Monday, a federal appeals court panel in Missouri ruled the plan should remain on hold until a lawsuit from six states is resolved.

Biden unveiled his student loan forgiveness plan in August, drawing predictable reactions from both sides of the fiscal camp. Supporters applauded the move but called for even greater debt relief, while opponents such as Sen. Ted Cruz, R-Texas, decried the move as “morally bankrupt” because it would transfer the debt from student loan recipients to taxpayers, many of whom did not attend college.

The plan called for $10,000 of debt relief for borrowers who earn $125,000 or less annually, or $250,000 or less for households. Pell Grant recipients could be eligible for another $10,000 of relief. Since the program’s announcement, 26 million people have applied for debt forgiveness.

Even though officials already approved 16 million applications, none have received any relief due to the legal hang-ups. White House press secretary Karine Jean-Pierre said the administration plans to grant relief quickly “once we prevail in court.”

The Trump and Biden administrations paused student loan payment requirements during the COVID-19 pandemic. When U.S. Secretary of Education Miguel Cardona announced the debt forgiveness plan in August, he said that required monthly payments of student loans would resume in January 2023.

The Biden administration appealed Pittman’s ruling and will likely appeal the preliminary injunction ordered by the 8th U.S. Circuit Court of Appeals on Monday. As of Monday, StudentAid.gov greeted visitors with a message explaining the missing registration form. “Courts have issued orders blocking our student debt relief program,” it said, adding that the administration is not taking applications while it appeals the decision. “If you’ve already applied, we’ll hold your application … We will post information as soon as further updates are available.”