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Tori Gantz
By Tori Gantz November 30, 2022

Legal challenges stall Biden’s plan to forgive student loan debt

President Joe Biden's plan to waive student loan debt for people making less than $125,000 or families earning less than $250,000 annually has faced an uphill battle since his Aug. 24 announcement. 

The Justice Department has said that Biden's action is allowable under a 2003 law, known as the Higher Education Relief Opportunities for Students (HEROES) Act, which authorizes the executive branch to overhaul student loan programs. Enacted after the 9/11 terrorist attacks, the HEROES Act gave the president the right to cancel student debt during a national emergency.

But several legal challenges have stalled Biden's plan.

Frank Garrison is an attorney who borrowed money to finance his education and works for Pacific Legal Foundation, a conservative public interest law firm in California. He sued the Biden administration Sept. 27 alleging that the executive branch does not have the authority to create a new forgiveness policy and is overreaching Congress' power to make the laws.

A federal judge denied the motion for lack of standing. The judge said that because the federal program is not compulsory, it will not harm Garrison and the other plaintiff in the lawsuit.

In a separate lawsuit filed Sept. 29 in U.S. District Court, Arizona attorney general Mark Brnovich alleged that the Biden administration's use of the HEROES Act to cancel student debt is unconstitutional and unjustified. The case is ongoing.

Six states — Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina — also filed a joint lawsuit Sept. 29 asking a court to block the Biden administration's loan forgiveness program immediately.

The complaint said that Missouri's state-run student loan servicer could lose revenue if borrowers consolidate their loans under the Federal Family Education Loan program, among other harms to other states. A federal judge in Missouri dismissed the case for lack of standing, but the states appealed. The 8th Circuit U.S. Court of Appeals approved the states' request Oct. 24 for an emergency stay to block the program, pending appeal.

The Biden administration is responding to several other lawsuits to block the student debt cancellation; those additional challenges also argue that his move is unconstitutional and violates federal procedures by denying borrowers the opportunity to submit public comment.

On Nov. 10, District Judge Mark T. Pittman in Texas called Biden's plan a "complete usurpation" of congressional authority by the executive branch and rejected the Biden administration's arguments that it has authority to act under the HEROES Act. Pittman temporarily halted the program.

The Justice Department appealed Pittman's ruling.

It also issued an emergency appeal to the U.S. Supreme Court Nov. 18, asking the high court to reverse the nationwide injunction or to take up the case and set an expedited briefing schedule for the court's current term.

That 40-page filing by U.S. Solicitor General Elizabeth Prelogar marks the third time in less than a month that the justices have been asked to intervene in disputes over the program.

In response to the legal challenges, the Department of Education has scaled back the debt relief program.

The administration previously said borrowers with privately owned federal student loans, including Federal Family Education Loan (FFEL) and Perkins Loans, could consolidate their loans into federal Direct Loans made directly by the Department of Education. It said this would qualify those borrowers for relief under Biden's cancellation program, giving people a path to receive up to $10,000 or $20,000 of loan forgiveness.

That changed Sept. 29, when the administration said borrowers with federal student loans not held by the Department of Education "cannot obtain one-time debt relief by consolidating those loans into Direct Loans," according to the department's website.

The Biden administration is accepting and reviewing debt relief applications amid the ongoing lawsuits. The White House said Nov. 3 that close to 26 million people had applied to be considered for debt-relief. About 16 million people have been approved for loan cancellation, but the administration can't forgive the debt until legal challenges are resolved.

The Department of Education Nov. 22 extended a pause on student loan payments that were set to resume Jan. 1. Monthly student loan payments are scheduled to restart 60 days after litigation is resolved or the administration is able to implement debt relief, whichever comes first. If courts have not weighed in by June 30, monthly payments will resume 60 days after June 30, the department said.

Several lawsuits have been filed in courts across the country, halting Biden's plan to forgive student debt for millions of borrowers. We'll continue to monitor this pledge, but for now, we rate it Stalled.

Our Sources via Wayback Machine Internet Archive, "Racial Economic Equity," Nov. 13, 2020

White House, "Fact Sheet: President Biden Announces Student Loan Relief for Borrowers Who Need It Most," Aug. 24

PolitiFact, "Forgive student loan debt from public colleges and universities," Aug. 24

Frank Garrison of Pacific Legal Foundation lawsuit against the U.S. Department of Education and Education Sec. Miguel Cardona in Southern District Court of Indiana, Sept. 27

Department of Justice, "Use of the HEROES Act of 2003 to Cancel the Principal Amounts of Student Loans," Aug. 23

State of Arizona and AG Mark Brnovich lawsuit against President Biden, Education Sec. Miguel Cardona and the U.S. Department of Education in District Court of Arizona, Sept. 29

Politico, "Biden administration scales back student debt relief for millions amid legal concerns," Sept. 29

NPR, "In a reversal, the Education Dept. is excluding many from student loan relief," Sept. 29

States of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina lawsuit against President Biden, Education Sec. Miguel Cardona and the U.S. Department of Education in Eastern District Court of Missouri, Sept. 29

Office of Federal Student Aid, "Debt Relief | Application | Federal Student Aid"

Brown County Taxpayers Association lawsuit against President Biden, Education Sec. Miguel Cardona, Federal Student Aid Chief Operating Officer Richard Cordray, the U.S. Department of Education and the Office of Federal Student Aid in Eastern District Court of Wisconsin, Oct. 4

Myra Brown and Alexander Taylor lawsuit against the U.S. Department of Education and Education Sec. Miguel Cardona in Northern District Court of Texas - Fort Worth, Oct. 10

U.S. District Judge Mark Pittman's order granting motion for injunction, denying motion to dismiss for lack of jurisdiction in Northern District Court of Texas - Fort Worth, Nov. 10

Justice Department appeal to Myra Brown and Alexander Taylor's motion for preliminary injunction and motion to dismiss in Northern District Court of Texas - Fort Worth, Oct. 10

Biden administration's application to vacate the injunction entered by the 8th Circuit Court of Appeals, Nov. 22

Office of Federal Student Aid, "One-time Federal Student Loan Debt Relief"

White House, "By The Numbers: Millions of Americans' Student Loan Costs Will Rise Dramatically Under Republican Officials' Plans," Nov. 3

White House, "Statement by White House Press Secretary Karine Jean-Pierre on the District Court's Ruling on the Biden-⁠Harris Administration's Student Debt Relief Program," Nov. 10

U.S. Department of Education, "Biden-Harris Administration Continues Fight for Student Debt Relief for Millions of Borrowers, Extends Student Loan Repayment Pause," Nov. 22

Louis Jacobson
By Louis Jacobson August 24, 2022

Biden orders $10,000 to $20,000 in student loan debt forgiveness

After months of debating how to address student loan debt, President Joe Biden announced on Aug. 24 that he was ordering that $10,000 of student loan debt be waived for individuals earning less than $125,000 or couples earning less than $250,000. He also ordered an additional $10,000 to be waived for those who meet those earning requirements and had received Pell Grants, which are for low-income Americans.

This announcement advanced one of his prominent campaign promises from 2020.

While seeking office, Biden promised full cancellation for all student debt, not just $10,000 or $20,000.

"I propose to forgive all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities for debt-holders earning up to $125,000, with appropriate phase-outs to avoid a cliff," Biden wrote.

On other occasions, Biden said a "minimum" of $10,000, and other Democratic primary candidates such as Sen. Elizabeth Warren, D-Mass., often urged more aggressive forgiveness plans than Biden did. However, the promise we chose to track after Biden won was for full forgiveness, so we will rate that one here.

The White House said that the new policy would benefit up to 43 million borrowers and cancel the full balance for about 20 million borrowers. The White House cited Education Department estimates that nearly 90% of relief dollars will go to those earning less than $75,000 a year.

Biden also announced that the government will cap the monthly payments for undergraduate loans at 5% of a borrower's discretionary income, half of the current level.

Biden promised during the campaign that loan forgiveness "would also apply to individuals holding federal student loans for tuition from private HBCUs and MSIs." 

The White House fact sheet released on Aug. 24 doesn't specifically cite provisions that directly affect historically Black colleges and universities or minority serving institutions. But the plan says the Pell Grant provision should reduce racial disparities in wealth. "Black borrowers are twice as likely to have received Pell Grants compared to their white peers," the fact sheet says. 

Finally, Biden said he would be phasing out a pandemic-era pause on federal student loan repayments. It will be extended one final time, with payments resuming in January 2023.

"All this means people can finally start crawling out of that mountain of debt," Biden said. "When this happens, the whole economy is better off."

The decision drew immediate criticism from some on the left, who had hoped to see more debt wiped away, and many on the right, who framed the policy as one that shoveled money from blue-collar workers to college graduates.

The policy also attracted criticism from centrists, including many economists, who said it is poorly timed because it will increase inflationary pressures amid the country's highest inflation levels in 40 years.

During his announcement, Biden said that the plan would have no " meaningful effect on inflation."

However, Jason Furman, a Harvard University economist and top economic adviser to President Barack Obama, was unsparing on Twitter.

"Pouring roughly half (a) trillion dollars of gasoline on the inflationary fire that is already burning is reckless," Furman tweeted, adding a number of "other highly problematic impacts, including encouraging higher tuition in the future, encouraging more borrowing, creating expectations of future debt forgiveness, and more."

The Penn-Wharton Budget Model at the University of Pennsylvania estimated that a policy of $10,000 forgiveness under a $125,000 individual income limit would cost the federal government $300 billion, and that doesn't include the additional forgiveness for Pell Grant recipients that Biden announced in the final plan.

The plan "could add twice as much to the deficit as was just saved from the Inflation Reduction Act, completely eliminating any deficit reduction and then some," Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement.

Penn-Wharton researchers also offered a contrary assessment of which borrowers would benefit, concluding that between 69% and 73% of the debt forgiven (not including the Pell Grant add-ons) would accrue to households in the top 60% of the income distribution.

Biden and his advisers had been debating what to do on student loans since he became president. 

Until now, he had extended the payment pause, which had begun as a pandemic measure under President Donald Trump. Biden also accelerated the use of existing student-debt forgiveness programs for narrower groups: people with permanent disabilities, those who attended schools that defrauded them or have since shut their doors, and those who have worked in public-service jobs for 10 years and have paid down their loans steadily since then.

Biden also acted despite concerns that only Congress could initiate debt forgiveness. "The president can't do it," House Speaker Nancy Pelosi, D-Calif., said in July. "That's not even a discussion."

During his Aug. 24 announcement, Biden said he was "using authority granted by Congress" to order the new policy.

Lanae Erickson, who heads social policy at the centrist Democratic think tank Third Way, told the Washington Post that the decision will likely be challenged in the courts.

While the debt cancellation Biden has ordered doesn't cancel 100% of student debt, it's a substantial step. If the courts block his effort, we'll revisit this promise. But for now, this earns a Compromise.

Louis Jacobson
By Louis Jacobson January 11, 2022

Biden pauses student loan payments, but hasn’t pursued large-scale forgiveness

As a presidential candidate, Joe Biden promised to forgive undergraduate student debt for people earning up to $125,000.

In office, Biden has paused student loan payments during the coronavirus pandemic, and he has accelerated loan forgiveness under more limited programs. But he has not pursued across-the-board loan forgiveness, either through legislation in Congress or by the less legally certain course of executive action.

The pandemic-related pause

Biden extended an existing pause on student loan payments prompted by the pandemic several times, most recently through May 1, 2022. This means that people with student loan balances don't have to make payments. However, the loans are not forgiven, either in whole or in part.

Limited forms of debt forgiveness

The administration has accelerated the use of existing student-debt forgiveness programs. 

These include a program to cancel student debts for people with permanent disabilities; for those who attended schools that defrauded them or have since shut their doors; and those that have worked in public-service jobs for 10 years and have paid down their loans steadily since then.

The Education Department estimated that it has discharged or is working to discharge about $12.7 billion in student debt for more than 638,000 borrowers, according to NPR

That's not insignificant, but it's a small fraction of the $1.6 trillion in federal student loans outstanding and the 46 million Americans who hold them.

Might there be an across-the-board forgiveness?

The continuation of the pandemic pause has bought Biden some time before he has to decide on whether to pursue across-the-board student loan forgiveness. However, Biden's actions so far do not suggest that this proposal is high on his agenda. 

He has declined to include a broad-based student loan forgiveness in the major legislative vehicle for safety-net proposals, the Build Back Better bill, which has been passed by the House and is awaiting action in the Senate.

Republican opposition would make it a hard sell in Congress. Sen. John Thune, R-S.D., the second-ranking Republican in the chamber, called large-scale loan forgiveness "incredibly, fundamentally unfair" to those who already repaid their debts.

Some forgiveness advocates have urged Biden to use executive action as a way to work around opposition in Congress. But even Democratic officials have expressed doubts about this course.

"The president can't do it," House Speaker Nancy Pelosi, D-Calif., said in July. "That's not even a discussion."

Biden himself echoed that in a February 2021 town hall, when he said he was doubtful that an executive action would pass legal muster. "I don't think I have the authority," Biden said.

All in all, Biden has "cancelled debt for those who already should have had it under existing policies, but has yet to create policies to expand debt cancellation to a broad level," said Jalil Mustaffa Bishop, an assistant professor in Villanova University who has studied the issue.

There's still time for Biden to start pursuing broad-based student-loan forgiveness, but his actions so far do not suggest he will. We rate the promise Stalled.

Our Sources

White House, "Statement by President Joe Biden Extending the Pause on Student Loan Repayment an Additional 90 Days," Dec. 22, 2021

Education Department, "Biden-Harris Administration Extends Student Loan Pause Through May 1, 2022," Dec. 22, 2021

John Thune, "Thune: Loan Forgiveness is Not a Solution for the Student Debt Problem," Feb. 24, 2021

NPR, "Biden pledged to forgive $10,000 in student loan debt. Here's what he's done so far," Dec. 7, 2021

CNBC, "Pelosi says Biden doesn't have power to cancel student debt," July 28, 2021

Politico, "To forgive or not to forgive: Biden's student loan discord," Jan. 5, 2022

Washington Post, "Biden's student-debt pause invigorates the push for loan forgiveness," Dec. 30, 2021

Email interview with Jalil Mustaffa Bishop, assistant professor in Villanova University's department of education and counseling, Jan. 7, 2022

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