President Joe Biden’s Student Debt Relief plan was struck down by federal judge Mark Pittman in Texas Thursday.
The plan, which was announced in September, was implemented to help lower and middle class families relieve their federal student loans.
The ruling is the plan’s most significant setback thus far, and as of Thursday, the U.S. Department of Education has stopped accepting applications for student debt relief. While the plan had been on hold since Oct. as a result of another lawsuit filed by six states in the U.S. Court of Appeals for the 8th Circuit, the program was still accepting applications and had received 26 million applications by the time the plan was struck down. While no applicant has currently received any relief from the program, eligible borrowers were able to receive up to $10,000 of student loan relief, or up to $20,000 if they also received a Pell Grant.
The Job Creators Network Foundation, a conservative organization working to inform the American workforce on American policy, filed the lawsuit in October on behalf of a borrower in Texas who was ineligible for $20,000 in relief because he had not received a Pell Grant and another borrower whose privately held loans did not fall under the program’s umbrella. The Foundation alleged that the program was unlawful, as there was no mode for the public to express their concerns about eligibility.
The Biden administration argued that Congress granted the Secretary of Education the power to forgive the loans with the HEROES Act of 2003, which allows the Secretary to discharge student loan debt in the case of a national emergency. The Biden administration argued that the COVID-19 pandemic qualifies as such a national emergency.
Pittman sided with the plaintiffs and said in his opinion that the HEROES Act did not provide the executive branch the authority to make the student loan forgiveness program.
“In this country, we are not ruled by an all-powerful executive with a pen and a phone,” Pittman wrote in the opinion. “Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government.”
This is not the only lawsuit filed against the plan. In the U.S. Circuit Court of Appeals for the 8th Circuit, a lawsuit filed by six states in October resulted in a temporary administrative hold on the program, barring it from offering any actual debt relief. This hold is still active. The states also argued that the Biden administration did not have the legal authority to grant the relief detailed in the program.
The Biden administration immediately appealed Pittman’s decision in the U.S. Circuit Court of Appeals for the 5th Circuit. If the decision is overturned, the program could once again begin to offer relief to eligible borrowers. The Department of Justice could also ask for an emergency stay of the Judge’s order and, if granted, that would also allow the program to resume canceling student debt, even before a decision is made in the 5th Circuit.
While borrowers wait for the program to play out in court, they can subscribe for updates on the program from the Department of Education.
Even with this program on hold, there are some other ways students can get financial relief. The Biden administration also unveiled in August an income-driven repayment plan that could offer borrowers some relief. The plan would lower payments to match the income of the borrower. The plan would reduce student loan payments up to 5% of their discretionary income. While the rate varies based on a borrower’s specific situation, the current lowest rate for the plan is 10%. Participating in this program would extend the life of the loan.
Daily Staff Reporter Riley Hodder can be reached at rehodder@umich.edu.