Supreme Court leaves student debt relief program on hold after Texas judge blocked it

A student walks through the Library Mall at the University of North Texas in Denton in March. A federal judge in Texas last month struck down the Biden administration’s plan for student debt relief. The U.S. Supreme Court says it will take up the case in February or March. (Credit: Emil Lippe for The Texas Tribune)

The Supreme Court on Thursday delayed its decision on President Joe Biden’s student loan forgiveness plan, leaving it blocked until justices hear the case early next year.

The delay is the latest in the uphill battle for student loan forgiveness, a program that would have given thousands of dollars in relief to more than 40 million borrowers.

Last month, a federal judge in North Texas ruled that the forgiveness program was “unlawful” because Biden did not follow federal procedures to allow for public comment prior to the policy’s announcement.

In the order, the court said it would hear full arguments in February. Data from the office of Federal Student Aid shows that Texas has 3.3 million residents with student loan debt for a total of $110.7 billion. Texas has the second-highest amount of borrowers and debt, behind California, in which students owe $133.5 billion.

Biden announced the plan in August. People who earn over $125,000 a year are ineligible for the forgiveness program, and the amount for applicants is limited to $10,000. However, recipients of Pell Grants, which are intended for low-income students, are eligible for up to $20,000 in relief. Texas has more than 2.3 million Pell Grant recipients.

Borrowers were able to start applying for the program in October. The program was immediately met with multiple lawsuits, including one led by leaders from six GOP-led states and one filed in a North Texas court by the Job Creators Network Foundation 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 8th U.S. Circuit Court of Appeals then temporarily halted the program that same month.

By then, more than 16 million people had already been approved for the relief by the U.S. Education Department. In November, the agency emailed updates to approved applicants stating, “A number of lawsuits have been filed challenging the program, which have blocked our ability to discharge your debt at present.”

According to the Texas Higher Education Coordinating Board, in 2021, 56% of students who graduated from four-year public universities had approximately $25,000 in student loan debt.

Biden extended the pause on student debt payments, which was set to expire on Jan. 1, but if the plan is not implemented or the lawsuit is unresolved, payments will begin again after June 30. The court is setting arguments for late February or early March.