President Biden’s student loan forgiveness program has been halted by a federal judge in Texas, putting the administration’s plan to forgive up to $20,000 in federal loans held by tens of millions of borrowers on hold.
The decision from the U.S. District Judge Mark T. Pittman of the Northern District of Texas granted the Job Creators Network Foundation, a conservative organization that filed the lawsuit in October on behalf of two student loan borrowers, a legal victory.
The forgiveness program was already on hold after an appeals court issued a stay in another lawsuit filed against it. However, Thursday’s decision puts Biden’s debt relief plan in jeopardy even further, as more than half of the eligible 40 million borrowers have already signed up.
According to the Biden administration’s plan, people earning less than $125,000 per year, or less than $250,000 for married couples, could have up to $10,000 in federal student loan debt forgiven. Pell Grant recipients, who receive federal aid for low-income students, could have up to $20,000 forgiven.
Borrowers are concerned about the court ruling, which the Justice Department has appealed to the 5th Circuit Court of Appeals, as well as other legal challenges to Biden’s plan. Here’s what we know so far.
According to the plaintiffs, the Biden administration made arbitrary decisions regarding eligibility for and the amount of forgiveness. They argue that any attempt at mass forgiveness should go through Congress, which is supposed to be in charge of government spending. They also believe the administration violated federal procedures by not allowing them and other borrowers to comment before launching the program.
Alexander Taylor, one of the plaintiffs in the case, is eligible to have $35,000 in student loans reduced by $10,000, but he does not qualify for the additional $10,000 provided to Pell Grant recipients because he never received one. Myra Brown, the other plaintiff, is ineligible for the plan because her federal loans, which were originated under the now-defunct Federal Family Education Loan (FFEL) program, are held by private entities. Some FFEL borrowers had consolidated their loans in order to be eligible for the new forgiveness program, but the Biden administration ended that possibility in late September.
Bernie Marcus, a Republican donor who backed Donald Trump and co-founded Home Depot, founded the Job Creators Network Foundation. The lawsuit was filed on behalf of the two borrowers at the heart of the dispute.
Since its announcement in August, it has been among a group of conservative organizations, Republican attorneys general, and top lawmakers working to derail Biden’s plan, which they claim represents illegal executive overreach. A week after Biden announced the policy, the president of the Job Creators Network announced that the organization was assembling a legal team and working with outside counsel to prepare a lawsuit.
The federal judge who ruled Biden’s program illegal is Mark T. Pittman, who was appointed to the bench by Donald Trump in 2019. He is a member of the Federalist Society, a conservative legal advocacy organization, and he has written other contentious decisions. In August, he overturned a Texas law that prohibited adults under the age of 21 from carrying handguns, claiming that the age limit violated the Second Amendment. He argued that because the Constitution does not specify an age limit for the right to bear arms, adults aged 18 to 20 should not be prohibited from carrying handguns outside the home.
No, the ruling is being appealed by the Biden administration. The case has now been assigned to the United States Court of Appeals for the Fifth Circuit.
The appeals court could vacate the district court ruling and return the case to the lower court, or rule in favor of the administration based on the merits of the appeal. Following the court’s decision, either side may petition the Supreme Court to hear the case.
“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 that it can quickly process their relief once we prevail in court,” White House press secretary Karine Jean-Pierre said.
After Thursday’s ruling, the Education Department no longer accepts applications, but it encouraged borrowers to sign up for updates at studentaid.gov.