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A federal judge in North Texas ruled on Thursday that President Joe Biden’s student loan forgiveness program is “unlawful,” the latest challenge to the policy that has seen several attacks from conservative groups.
U.S. District Judge Mark Pittman said in court files that he declared the loan forgiveness plan unlawful because Biden did not follow federal procedures to allow for public comment prior to the policy’s announcement.
In October, the Job Creators Network Foundation filed the lawsuit in the North Texas court on behalf of two borrowers who don’t qualify for all of the program’s benefits. Those borrowers disagreed with the program’s eligibility criteria and the lawsuit alleged that they could not voice their disagreement.
The latest attack on Biden’s loan forgiveness programs comes after the U.S. Court of Appeals for the 8th Circuit temporarily halted the program last month in response to a lawsuit from six GOP-led states. The Texas lawsuit joins a growing number of legal challenges to the loan forgiveness plan that Biden announced in August. Borrowers started applying for the program in October.
Since then, Republicans and other advocacy groups have attacked the program as a handout to high-salaried professionals. Gov. Greg Abbott signed a letter in September that said student loan forgiveness would harm the working class.
But people who earn over $125,000 are not eligible for the loan relief program. Eligible applicants are limited to $10,000 in relief, unless they are recipients of Pell Grants, intended for low-income students, in which case they can get up to $20,000 in relief.
In 2021, 56% of students who graduated from four-year public universities had approximately $25,000 in student debt, according to the Texas Higher Education Coordinating Board. Biden’s decision to forgive more money for low-income students who qualified for federal Pell Grants will especially impact low-income borrowers and people of color, who are more likely to qualify for federal financial aid and carry higher amounts of student loan debt.
On Friday, the U.S. Department of Education closed the online portal for student debt relief, which was accepting application as of Thursday evening.
"Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders," the website reads.
The Texas lawsuit alleges that Biden’s program violated the Administrative Procedure Act by not providing a public comment period. The lawsuit also argues the Secretary of Education does not have the authority to implement the program.
Alexander Taylor, one of the plaintiffs, is not eligible for $20,000 in forgiveness because he did not receive a Pell Grant, which is only available to low-income students, and therefore will only be entitled to $10,000 off his student loans.
The other plaintiff, Myra Brown, has privately held loans that are no longer covered by Biden’s plan. Earlier in the program’s existence, commercially held loans like Brown’s could be consolidated into Direct Loans, which meet the eligibility requirements of Biden’s program, but the Education Department changed this policy after fielding multiple lawsuits from conservative states.
Brown already benefitted from a federal loan forgiveness program as the owner of Desert Star Enterprises Inc., The Intercept reported. Brown's company received a $48,000 business loan, $42,997 of which was forgiven in April as part of the Paycheck Protection Program, the publication reported.
In response to the lawsuit, the Justice Department argued last month that Biden’s plan doesn’t require notice and comment.
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