Tag Archives: forgiveness

US

EXPLAINER: Where does student loan forgiveness stand?

Leave a comment

A federal appeals court in St. Louis has created another roadblock for President Joe Biden’s plan to provide millions of borrowers with up to $20,000 apiece in federal student-loan forgiveness.

The court on Monday agreed to a preliminary injunction halting the program in one of several cases challenging the debt relief plan.

With the forgiveness program on hold, millions of borrowers have begun to wonder if they’ll get debt relief at all. The fate of the plan will likely eventually end up in the Supreme Court.

Here’s where things stand:

HOW THE FORGIVENESS PLAN WORKS

The debt forgiveness plan announced in August would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would get an additional $10,000 in debt forgiven.

College students qualify if their loans were disbursed before July 1. The plan makes 43 million borrowers eligible for some debt forgiveness, with 20 million who could get their debt erased entirely, according to the administration.

The Congressional Budget Office has said the program will cost about $400 billion over the next three decades.

The White House said 26 million people have applied for debt relief, and 16 million people had already had their relief approved.

A HOLD ON THE PLAN GETS EXTENDED

The ruling Monday was made by a three-judge panel from the 8th U.S. Circuit Court of Appeals in St. Louis, which has been considering an effort by the Republican-led states of Nebraska, Iowa, Kansas, Missouri, Arkansas and South Carolina to block the loan forgiveness program.

The ruling from the panel made up of three Republican appointees — one was appointed by President George W. Bush and two by President Donald Trump — extends a hold until the issue is resolved in court. Previously, the court had put it temporarily on hold.

Nebraska Attorney General Doug Peterson, a Republican, said in a statement that the ruling “recognizes that this attempt to forgive over $400 billion in student loans threatens serious harm to the economy that cannot be undone.”

White House Press Secretary Karine Jean-Pierre said the administration is confident in its legal authority for the student debt relief plan.

“The Administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle class Americans,” Jean-Pierre said.

A TEXAS JUDGE FOUND BIDEN OVERSTEPPED

On Thursday, U.S. District Judge Mark Pittman — an appointee of former President Donald Trump based in Fort Worth, Texas — ruled that the program usurped Congress’ power to make laws. The administration immediately filed a notice to appeal.

Pittman said the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act, did not provide the authorization for the loan forgiveness program.

The law allows the secretary of education to waive or modify terms of federal student loans in times of war or national emergency. The administration said the COVID-19 pandemic created a national emergency.

But Pittman said such a massive program required clear congressional authorization.

The plan has faced other legal challenges. In October, Supreme Court Justice Amy Coney Barrett rejected an appeal from a Wisconsin taxpayers group. A federal judge had earlier dismissed the group’s lawsuit, finding they didn’t have the legal right, or standing, to bring the case.

THE TEXAS RULING WAS A BLOW TO THE PLAN

Pittman’s decision strikes down the underlying legal argument used to justify Biden’s plan. Previously, the White House has been able to dodge legal attacks made in lawsuits by tweaking details of the program.

One lawsuit argued that the automatic debt cancellation would leave borrowers paying heavier taxes in states that impose a tax on canceled debt. The administration responded by allowing borrowers to opt out. Another suit alleged that Biden’s plan would hurt financial institutions that earn revenue on certain kinds of federal student loans. The White House responded by carving those loans out of the plan.

The Texas ruling, however, argues that the HEROES Act does not grant authority for mass debt cancellation. The law grants the Education Department wide flexibility during national emergencies, but the judge ruled that it’s unclear whether debt cancellation was a necessary response to COVID-19, noting that Biden recently declared the pandemic over.

IS THE CASE BOUND FOR THE SUPREME COURT?

The legal situation is complicated because of the numerous lawsuits. It’s likely that the Texas case and the lawsuit filed by the six states will be appealed to the Supreme Court. Before it reaches that level, the 5th and 8th Circuit appeals courts — both dominated by conservative judges — will rule separately in each case.

The case before the 8th Circuit could end up in the Supreme Court soon now that the panel has granted the injunction sought by the six GOP-led states.

Likewise, the administration has signaled it will appeal the Texas ruling. If the 5th U.S. Circuit Court of Appeals is asked to block Pittman’s ruling pending appeal, the losing side could then turn to the Supreme Court.

In either case, appellate courts would not issue a final ruling on the validity of the program, but on whether it can go forward while challenges proceed.

Meantime, the Biden administration is no longer accepting applications for student loan forgiveness.

Read original article here

US

Student loan forgiveness: Federal court strikes down Biden’s program

Leave a comment


Washington
CNN
 — 

Student loan borrowers are now waiting indefinitely to see if they’ll receive debt relief under President Joe Biden’s student loan forgiveness program after a federal judge in Texas struck down the program Thursday, declaring it illegal.

The Department of Justice immediately appealed to the 5th US Circuit Court of Appeals. But that case will have to play out before the Biden administration can cancel any federal student loan debt under the program.

While the Biden administration has faced several legal challenges to the student loan forgiveness program since it was announced in August, the ruling on Thursday is the most significant setback thus far – prompting the Department of Education to stop accepting applications for debt relief.

Biden’s program was already on hold due to a separate legal challenge, but the administration had continued accepting applications, having received 26 million to date.

Under the rules of the program, eligible low- and middle-income borrowers can receive up to $10,000 of federal student loan forgiveness and up to $20,000 in cancellation if they also received a Pell grant while enrolled in college.

Borrowers will have to wait for the government’s appeal to the 5th Circuit Court to play out. While it can be tough to follow all the various legal challenges, borrowers can subscribe for updates from the Department of Education and check the Federal Student Aid website for further information.

It could take months for the court to issue a final ruling. If it overturns the Texas lower court’s ruling, then the Biden administration could begin canceling student debt.

But the Department of Justice could also ask for an emergency stay of the Texas judge’s order. If granted – and if a different appeals court ends its temporary stay on the program in a separate, pending case – then the administration would be allowed to cancel debt before a final ruling is made by the 5th Circuit.

Initially, the Biden administration said that it would start granting student loan forgiveness before payments are set to resume in January after a years-long pandemic pause.

But Thursday’s ruling in Texas puts that timeline in jeopardy.

“For the 26 million borrowers who have already given the Department of Education the necessary information to be considered for debt relief – 16 million of whom have already been approved for relief – the Department will hold onto their information so it can quickly process their relief once we prevail in court,” said White House press secretary Karine Jean-Pierre in a statement Thursday.

“We strongly disagree with the District Court’s ruling on our student debt relief program,” she said.

The Biden administration has argued that Congress has given the secretary of education the power to broadly discharge student loan debt in a 2003 law known as the HEROES Act.

But the Texas federal judge found that the law does not provide the executive branch clear congressional authorization to create the student loan forgiveness program.

“The program is thus an unconstitutional exercise of Congress’s legislative power and must be vacated,” wrote Judge Mark Pittman, who was nominated by then-President Donald Trump.

“In this country, we are not ruled by an all-powerful executive with a pen and a phone,” he continued.

The Texas lawsuit was filed by a conservative group, the Job Creators Network Foundation, in October on behalf of two borrowers who did not qualify for debt relief.

One plaintiff did not qualify for the student loan forgiveness program because her loans are not held by the federal government and the other plaintiff is only eligible for $10,000 in debt relief because he did not receive a Pell grant.

They argued that they could not voice their disagreement with the program’s rules because the administration did not put it through a formal notice-and-comment rule making process under the Administrative Procedure Act.

“This ruling protects the rule of law which requires all Americans to have their voices heard by their federal government,” said Elaine Parker, president of Job Creators Network Foundation, in a statement Thursday.

The advocacy group was founded by Bernie Marcus, a major Trump donor and former Home Depot CEO.

The Biden administration has been banned from canceling any debt since the 8th US Circuit Court of Appeals put an administrative hold on the program on October 21.

The appeals court has yet to rule on that lawsuit, brought by six Republican-led states. A lower court judge dismissed the lawsuit on October 20, ruling that the states did not have the legal standing to bring the challenge.

The Biden administration is facing several other legal challenges to the program. Supreme Court Justice Amy Coney Barrett has denied two separate requests to challenge the program.

If Biden’s program is allowed to move forward, individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years could see up to $10,000 of their federal student loan debt forgiven.

If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.

There are a variety of federal student loans and not all are eligible for relief. Federal Direct Loans, including subsidized loans, unsubsidized loans, parent PLUS loans and graduate PLUS loans, are eligible.

But federal student loans that are guaranteed by the government but held by private lenders are not eligible unless the borrower applied to consolidate those loans into a Direct Loan before September 29.

This headline and story have been updated with additional information.

Read original article here

Business

FED interest rate hike live online: inflation relief check by state, Student loan forgiveness, unemployment

Leave a comment

Those who paid down student loan debt during moratorium getting refund checks

Around 8.8 million borrowers tried to make headway on paying down their student loan debt during the moratorium on payments and interest. The pause on student loan payments was implemented in March 2020 and has been extended several times since.

However, the holiday will be coming to an end soon, expiring 31 December 2022. Millions of borrowers were hoping to take advantage of President Biden’s annouced federal student loan forgiveness program.

The program came to a screeching halt though when some 22 million had already signed up after an injunction was imposed by the courts due to a lawsuit from a handful Republican states. Good news though for those that paid down their debt during the moratorium.

Bloomberg reports that despite the injunction, they will be receiving refunds as part of the covid-19 relief stimulus program. 

Read original article here

US

U.S. appeals court temporarily blocks Biden’s student loan forgiveness plan

Leave a comment

WASHINGTON, Oct 21 (Reuters) – A U.S. appeals court on Friday temporarily blocked President Joe Biden’s plan to cancel billions of dollars in college student debt, one day after a judge dismissed a Republican-led lawsuit by six states challenging the loan-forgiveness program.

The 8th U.S. Circuit Court of Appeals granted an emergency stay barring the discharge of any student debt under the program until the court rules on the states’ request for a longer-term injunction while Thursday’s decision against them is appealed.

The St. Louis-based appeals court also ordered an expedited briefing schedule on the matter.

Register now for FREE unlimited access to Reuters.com

U.S. District Judge Henry Autrey in St. Louis ruled on Thursday that while the six Republican-led states had raised “important and significant challenges to the debt relief plan,” he threw out their lawsuit on grounds they lacked the necessary legal standing to pursue the case.

Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina said Biden’s plan skirted congressional authority and threatened the states’ future tax revenues and money earned by state entities that invest in or service the student loans.

The non-partisan Congressional Budget Office in September calculated the debt forgiveness would cost the government about $400 billion.

White House press secretary Karine Jean-Pierre said Thursday’s temporary order does not prevent borrowers from applying for student debt relief or bar the Biden administration from reviewing applications and preparing them for transmission to loan servicers.

“We encourage eligible borrowers to join the nearly 22 million Americans whose information the Department of Education already has,” Jean-Pierre said.

U.S. President Joe Biden speaks about administration plans to forgive federal student loan debt during remarks in the Roosevelt Room at the White House in Washington, U.S., August 24, 2022. REUTERS/Leah Millis

“It is important to note that the order does not reverse the trial court’s dismissal of the case or suggest that the case has merit,” she added. “It merely prevents debt from being discharged until the (appeals) court makes a decision.”

Nebraska Attorney General Doug Peterson, a Republican who is leading the lawsuit, welcomed the temporary stay.

“It’s very important that the legal issues involving presidential power be analyzed by the court before transferring over $400 billion in debt to American taxpayers,” he said.

The case reaching the 8th Circuit is one of a number that conservative state attorneys general and legal groups have filed seeking to halt the debt forgiveness plan announced in August by Biden, a Democrat.

Autrey ruled about an hour after U.S. Supreme Court Justice Amy Coney Barrett denied without explanation an emergency request to put the debt relief plan on hold in a separate challenge brought by the Wisconsin-based Brown County Taxpayers Association.

Biden said the U.S. government will forgive up to $10,000 in student loan debt for borrowers making less than $125,000 a year, or $250,000 for married couples. Borrowers who received Pell Grants to benefit lower-income college students will have up to $20,000 of their debt canceled.

The policy fulfilled a promise that Biden made during the 2020 presidential campaign to help debt-saddled former college students.

Democrats are hoping the policy will boost support for them in the Nov. 8 midterm elections in which control of Congress is at stake.

Register now for FREE unlimited access to Reuters.com

Reporting by Eric Beech in Washington and Steve Gorman in Los Angeles; additional reporting by Nate Raymond and Ismail Shakil; Editing by Grant McCool and Lincoln Feast

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

US

Appeals court temporarily pauses student loan forgiveness plan

Leave a comment

A federal appeals court Friday is blocking President Biden’s student loan forgiveness program. The 8th Circuit Court of Appeals issued a temporary stay in response to an emergency motion brought by attorneys for several Republican-led states after a lower court ruled that their September lawsuit to stop the debt forgiveness program lacked standing.

In their appeal, the plaintiffs — which include Iowa, Kansas, Missouri, Nebraska, South Carolina and Arkansas — said the forgiveness program will irreparably harm their states’ student loan programs.

“Missouri is harmed from the financial losses that the cancellation inflicts,” the motion read.  

They stay is not based on the merits, but allows for further briefings on the issue next week.

This also comes after the U.S. Supreme Court Thursday declined an emergency appeal by a group of Wisconsin taxpayers who had also challenged the plan in a separate lawsuit.

President Biden announced in August that his administration is canceling up to $20,000 in student loan debt for millions of Americans. Nearly 20 million people will be eligible to have their debt fully canceled under the new plan.


Biden touts student loan forgiveness program ahead of midterm election

04:12

Borrowers who received Pell Grants, which are for low- and middle-income families, can get as much as $20,000 in debt forgiven, while other borrowers can get relief of up to $10,000.

Only individuals who earned less than $125,000 in 2020 or 2021 and married couples with total annual income below $250,000 are eligible for loan relief under the program.

Earlier this week, the U.S. Department of Education formally launched its debt relief application website. It’s unclear how Friday’s ruling will affect the site or the application process. However, White House press secretary Karine Jean-Pierre said in a statement Friday evening that the “temporary order does not prevent borrowers from applying for student debt relief.”

“It also does not prevent us from reviewing these applications and preparing them for transmission to loan servicers,” Jean-Pierre  said. “It is also important to note that the order does not reverse the trial court’s dismissal of the case, or suggest that the case has merit. It merely prevents debt from being discharged until the court makes a decision.”

U.S. Education Secretary Miguel Cardona reiterated that sentiment in his own statement, saying: “today’s temporary decision does not stop the Biden Administration’s efforts to provide borrowers the opportunity to apply for debt relief, nor does it prevent us from reviewing the millions of applications we have received.”

— Robert Legare contributed reporting. 

Read original article here

US

Appeals court temporarily pauses student loan forgiveness plan

Leave a comment

A federal appeals court Friday is blocking President Biden’s student loan forgiveness program. The 8th Circuit Court of Appeals issued a temporary stay in response to an emergency motion brought by attorneys for several Republican-led states after a lower court ruled that their September lawsuit to stop the debt forgiveness program lacked standing.

In their appeal, the plaintiffs — which include Iowa, Kansas, Missouri, Nebraska, South Carolina and Arkansas — said the forgiveness program will irreparably harm their states’ student loan programs.

“Missouri is harmed from the financial losses that the cancellation inflicts,” the motion read.  

They stay is not based on the merits, but allows for further briefings on the issue next week.

This also comes after the U.S. Supreme Court Thursday declined an emergency appeal by a group of Wisconsin taxpayers who had also challenged the plan in a separate lawsuit.

President Biden announced in August that his administration is canceling up to $20,000 in student loan debt for millions of Americans. Nearly 20 million people will be eligible to have their debt fully canceled under the new plan.


Biden touts student loan forgiveness program ahead of midterm election

04:12

Borrowers who received Pell Grants, which are for low- and middle-income families, can get as much as $20,000 in debt forgiven, while other borrowers can get relief of up to $10,000.

Only individuals who earned less than $125,000 in 2020 or 2021 and married couples with total annual income below $250,000 are eligible for loan relief under the program.

Earlier this week, the U.S. Department of Education formally launched its debt relief application website. It’s unclear how Friday’s ruling will affect the site or the application process. However, White House press secretary Karine Jean-Pierre said in a statement Friday evening that the “temporary order does not prevent borrowers from applying for student debt relief.”

“It also does not prevent us from reviewing these applications and preparing them for transmission to loan servicers,” Jean-Pierre  said. “It is also important to note that the order does not reverse the trial court’s dismissal of the case, or suggest that the case has merit. It merely prevents debt from being discharged until the court makes a decision.”

U.S. Education Secretary Miguel Cardona reiterated that sentiment in his own statement, saying: “today’s temporary decision does not stop the Biden Administration’s efforts to provide borrowers the opportunity to apply for debt relief, nor does it prevent us from reviewing the millions of applications we have received.”

— Robert Legare contributed reporting. 

Read original article here

US

Student loan forgiveness application opens

Leave a comment

President Joe Biden speaks about the student debt relief portal beta test at the White House on October 17.

Susan Walsh/AP

Federal student loan borrowers can now apply for up to $20,000 in debt forgiveness, thanks to a new plan announced by President Joe Biden in late August.

The administration officially launched the application Monday, following a brief “beta period” over the weekend during which its team assessed whether tweaks were needed.

Not every student loan borrower is eligible for the debt relief — only federally held student loans qualify and private student loans are excluded.

Where can you find the application?

You can complete the short application at: Studentaid.gov

What kind of federal loans are eligible?

There are a variety of federal student loans and not all are eligible for relief. Federal Direct Loans, including subsidized loans, unsubsidized loans, parent PLUS loans and graduate PLUS loans, are eligible.

But federal student loans that are guaranteed by the government but held by private lenders are not eligible unless the borrower applied to consolidate those loans into a Direct Loan by Sept. 29.

The Department of Education initially said these privately held loans, many of which were made under the former Federal Family Education Loan program and Federal Perkins Loan program, would be eligible for the one-time forgiveness action – but reversed course in September when six Republican-led states sued the Biden administration, arguing that forgiving the privately held loans would financially hurt states and student loan servicers.

Defaulted Federal Family Education Loans and defaulted Perkins Loans are still eligible for the debt relief even if they are privately held.

What year is the income threshold based on?

Eligibility is based on a borrower’s adjusted gross income for either tax year 2020 or 2021. Adjusted gross income can be lower than your total wages because it considers tax deductions and adjustments, like contributions made to a 401(k) retirement plan.

Will I have to pay taxes on the amount of debt canceled?

Borrowers will not have to pay federal income tax on the student loan debt forgiven, thanks to a provision in the American Rescue Plan Act that Congress passed last year. But it’s possible that some borrowers may have to pay state income tax on the amount of debt forgiven. There are a handful of states that may tax discharged debt if state legislative or administrative changes are not made beforehand, according to the Tax Foundation. 

Are current students eligible for forgiveness?

Yes, some current students are eligible. Eligibility for borrowers who filed the Free Application for Federal Student Aid, known as the FAFSA, as an independent will be based on the individual’s own household income. Eligibility for borrowers who are enrolled as dependent students, generally those under the age of 24, will be based on parental income for either 2020 or 2021.

What about debt from grad school?

Yes, if your income meets the eligibility threshold.

Find more answers to your questions here.

CNN’s Christine Romans explains who Biden’s plan helps:

Read original article here

US

Biden launches student loan forgiveness application

Leave a comment



CNN
 — 

President Joe Biden on Monday announced the formal launch of the federal application for Americans seeking student loan forgiveness, the latest phase of his plan that is expected to provide debt relief to as many as 43 million borrowers.

“Today, I’m announcing millions of people working and middle-class folks can apply and get this relief. And it’s simple and it’s now. It’s easy,” Biden said in remarks from the White House alongside Education Secretary Miguel Cardona. “This is a game changer for millions of Americans … and it took an incredible amount of effort to get this website done in such a short time.”

Individuals seeking to apply for student debt relief can now fill out the form in English or Spanish at Studentaid.gov. The form includes information on the debt relief, who qualifies for it and how it works. It asks applicants for information including their full name, Social Security number, date of birth, phone number and an email address. A beta version of the website was launched on Friday evening and Biden said over 8 million Americans used the website over the weekend to fill out their applications.

Biden in August announced his decision to cancel up to $10,000 in student loan debt for individuals making less than $125,000 a year or as much as $20,000 for eligible borrowers who were also Pell Grant recipients.

Borrowers must have federally held student loans to qualify. In addition to federal Direct Loans used to pay for an undergraduate degree, federal PLUS loans borrowed by graduate students and parents may also be eligible if the borrower meets the income requirements.

Individuals who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years are eligible for up to $10,000 of their federal student loan debt forgiven. The income thresholds are based on adjusted gross income.

The formal launch of the application marks the next phase of a massive technical undertaking for federal agencies and student loan servicers to provide broad relief to tens of millions of borrowers.

The President credited “a talented group of data scientists and engineers across the federal government” who “built and tested and launched this new application in just weeks.” In the few days of beta testing the application, Biden said, the website “handled more than 8 million applications without a glitch or difficulty.”

“As millions of people fill out the application, we’re going to make sure the system continues to work as smoothly as possible so that we can deliver student loan relief for millions of Americans as quickly and as efficiently as possible,” he added.

The Department of Education is facing several lawsuits challenging the student loan forgiveness policy. A US district judge could soon decide whether to temporarily block the program from taking effect after hearing a motion for a preliminary injunction last week. That could put student loan cancellation on hold until the judge issues a final ruling on the case.

Asked at the end of his remarks about litigation challenging the plan, Biden said he thinks the administration’s plan will hold up in court.

During his remarks on Monday, Biden also took aim at Republican critics of his student debt relief plan, calling their outrage “wrong” and “hypocritical.”

“I will never apologize for helping working Americans and middle-class people as they recover from the pandemic. Especially not the same Republicans who voted for a $2 trillion tax cut in the last administration, mainly benefited the wealthiest Americans and the largest corporations and didn’t pay for a penny of it and racked up the deficit,” he added.

Borrowers whose federal student loans are guaranteed by the government but held by private lenders, many of which were made under the former Federal Family Education Loan program and Federal Perkins Loan program, are currently excluded – unless a borrower applied to consolidate those loans into Direct loans by September 29.

Asked by CNN’s MJ Lee about those with privately held loans being ineligible for the mass relief, Cardona said the administration is “moving as quickly as possible to provide relief to as many people as possible.”

This is a breaking story and will be updated.

Read original article here

US

Student loan forgiveness applications now open through beta mode website, Biden administration says

Leave a comment



CNN
 — 

The Biden administration has opened the application process for Americans seeking student debt relief in a beta period starting Friday evening, officials told CNN, allowing applicants to begin signing up before the website is formally unveiled later this month.

In August, President Joe Biden announced his decision to cancel up to $10,000 in student loan debt for individuals making less than $125,000 a year or as much as $20,000 for eligible borrowers who were also Pell Grant recipients.

“Tonight, the Department of Education will begin beta testing the student debt relief website. During the beta testing period, borrowers will be able to submit applications for the Biden-Harris Administration’s student debt relief program,” a spokesperson for the Department of Education told CNN exclusively Friday.

The website is available at: https://studentaid.gov/debt-relief/application.

Anyone who applies for the debt relief in the beta period will receive a confirmation email, but their application will not be processed until the site formally launches, expected at a to-be-announced date before the end of October. Once processing begins, most qualifying borrowers are expected to receive debt relief within weeks.

The spokesperson continued, “Those borrowers will not need to reapply if they submit their application during the beta test, but no applications will be processed until the site officially launches later this month. This testing period will allow the Department to monitor site performance through real-world use, test the site ahead of the official application launch, refine processes, and uncover any possible bugs prior to official launch.”

The Department of Education’s technical team will be looking at site performance in real time and the beta version of the website will have scheduled pauses as the team assesses what refinements and tweaks are needed, an administration official told CNN in a phone interview, another official adding that “high spikes of demand” are expected. Anyone who is trying to submit their application during a beta pause will be encouraged to check back.

While there won’t be any changes made to the application itself, there could be changes to the website software as the tech team tracks how it’s working in the beta mode.

The form to apply will include information on the debt relief, who qualifies for it and how it works. It will ask applicants for information including their full names, Social Security number, date of birth, phone number and an email address.

Potential applicants who previously signed up for updates on the student debt relief process will receive an email notifying them about the beta website, and once the website is formally launched, the White House will begin to leverage its social channels to spread the word. There are also plans to brief digital creators and influencers in the coming weeks, officials said.

Read original article here

US

6 GOP-led states sue Biden over student loan forgiveness plan

Leave a comment


Washington
CNN
 — 

Six Republican-led states sued President Joe Biden on Thursday in an effort to block his student loan forgiveness plan from taking effect.

The lawsuit was filed in a federal court in Missouri by state attorneys general from Missouri, Arkansas, Kansas, Nebraska and South Carolina, as well as legal representatives from Iowa.

“In addition to being economically unwise and inherently unfair, the Biden Administration’s Mass Debt Cancellation is another example in a long line of unlawful regulatory actions. No statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed,” Nebraska Attorney General Doug Peterson’s office said in a news release.

Earlier this week, a public interest lawyer who is also a student loan borrower, sued the Biden administration over the student loan forgiveness plan, arguing that the policy is an abuse of executive power and that it would stick him with a bigger state tax bill.

The White House did not immediately respond to a request for comment.

Under Biden’s plan, individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years will see up to $10,000 of their federal student loan debt forgiven.

If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness. Pell grants are awarded to millions of low-income students each year, based on factors that include their family’s size and income and the cost charged by their college. These borrowers are also more likely to struggle to repay their student debt and end up in default.

The administration is expected to roll out the first wave of student loan forgiveness in October.

The Congressional Budget Office estimated this week that Biden’s plan could cost the government $400 billion but warned that the estimate relies on several assumptions and is “highly uncertain.”

Estimating the cost of student debt forgiveness is complicated because loans are generally paid back over several years. The White House argues that the CBO’s estimate should be looked at over a 30-year time frame.

Biden announced the forgiveness plan in August, after facing mounting pressure from Democrats to forgive some student loan debt. Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren repeatedly called on the President to cancel up to $50,000 in student loan debt per borrower.

But canceling federal student loan debt so broadly is unprecedented and, until now, has yet to be tested in court. Biden initially urged Congress to take action to cancel some student debt, rather than wade into a murky legal area himself, but Democrats don’t have the votes to pass such legislation.

In a Department of Education memo released in August, the Biden administration argued that the Higher Education Relief Opportunities for Students Act of 2003 – or Heroes Act – grants the Education Secretary the power to cancel student debt to help address the financial harm suffered due to the Covid-19 pandemic.

The Heroes Act, which was enacted in the wake of the September 11 terrorist attacks, “provides the Secretary broad authority to grant relief from student loan requirements during specific periods,” including a war, other military operation or national emergency, according to the memo.

The lawsuit filed Thursday argues that the Heroes Act does not grant the President such broad authority.

Additional lawsuits challenging Biden’s student loan forgiveness plan could be forthcoming. Arizona Attorney General Mark Brnovich, a Republican, has said he is working on developing the best legal theory to sue the administration over the action.

A conservative advocacy group called the Job Creators Network is also weighing its legal options, planning to file a lawsuit once the Department of Education formalizes the student loan forgiveness plan next month.

But some legal experts are skeptical that a legal challenge to Biden’s student loan forgiveness plan could be successful.

Abby Shafroth, staff attorney at the nonprofit National Consumer Law Center, previously told CNN that she believes the merits of the Biden administration’s legal statutory authority are strong and that it’s unclear who would have legal standing to bring a case and want to do so. Standing to bring a case is a procedural threshold requiring that an injury be inflicted on a plaintiff to justify a lawsuit.

If the standing hurdle is cleared, a case would be heard by a district court first – which may or may not issue a preliminary injunction to prevent the cancellation from occurring before a final ruling is issued on the merits of the hypothetical case.

Several recent US Supreme Court decisions have touched on executive power, limiting the federal government’s authority to implement new rules. While the Supreme Court takes up a small number of cases each year, lower courts may look at what the justices have said in those cases when assessing the Department of Education’s authority.

This story has been updated with additional information.

Read original article here