The Biden administration is no longer accepting applications for student loan forgiveness after a federal court blocked the administration’s plan.
“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 Federal Student Aid website said in a note shared Friday.
The office said it will hold applications from the more than 26 million borrowers who have already applied for forgiveness. Of those who have applied, 16 million have already been approved for forgiveness, according to the White House.
The plan was struck down by federal judge Mark Pittman in Texas on Thursday in response to a lawsuit filed in October.
Pittman ruled that the plan is unconstitutional because the executive branch does not have the congressional authorization to establish a student loan forgiveness program.
“In this country, we are not ruled by an all-powerful executive with a pen and a phone. Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government,” Pittman wrote in his opinion.
In response to the ruling, the White House said it will “never stop fighting for hardworking Americans most in need – no matter how many roadblocks our opponents and special interests try to put in our way.”
Since it was first introduced in August, Biden’s plan has faced several legal challenges.
The plan was already temporarily blocked by the 8th U.S. Circuit Court of Appeals, based in St. Louis, while the court considered a request from six Republican-led states that were appealing the dismissal of their lawsuit against the program, CNBC reported.
The latest suit in Texas was filed by two student loan borrowers. One of the plaintiffs is eligible for $10,000 of forgiveness under Biden’s program while the other is completely ineligible.
As the case progressed, experts began to express some concern about the impact the suit might have.
“On the substance, as a purely legal matter it shouldn’t have any impact,” Abby Shafroth, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center told MarketWatch. “I will acknowledge that I’m growing more concerned about what might actually happen ... It troubles me that this court seems to be sort of chomping at the bit to resolve this case.”
The future of student loan forgiveness is somewhat unclear following the federal judge’s decision.
The White House has already moved to appeal the ruling, The Washington Post reported. The case will now move to the U.S. Court of Appeals for the 5th Circuit, which can either return the case to a lower court or rule in the administration’s favor.
Depending on the court’s decision, either side could then take the case to the Supreme Court.
But those in support of the forgiveness plan are worried about what will come next.
“The devastating result of this court’s decision today is that tens of millions of student loan borrowers across the country now have their vital debt relief blocked as a result of this farcical and fabricated legal claim,” Persis Yu, the Student Borrower Protection Center’s deputy executive director and managing counsel, said in a news release.
Under Biden’s plan, borrowers who make less than $125,000 annually would see up to $10,000 of their debt canceled. Pell Grant recipients could see $20,000 in forgiveness.
For households, the income requirement to qualify for forgiveness is less than $250,000 annually. Any borrower whose income was below the cap in either 2020 or 2021 will qualify.
Current students are eligible for relief, too. Dependent students will qualify based on parental income, the White House says.
Originally, borrowers were told to expect relief within about six weeks of applying. Given the legal challenges, that timeline could look different now.
“Today’s decision is a tragic reminder of the tightening grip that special interests have on our legal system. It is disappointing to see this judge pervert the law in order to achieve a politically motivated outcome,” Yu said. “The Biden administration cannot now resume payments on January 1st. It must use all of its tools to fight to ensure that borrowers receive the debt relief they need.”
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