The White House announced it's extending the pause on student loan repayments past the December expiration date and through June 30, 2023, as its forgiveness plan remains in legal limbo.
Why it matters: The Biden administration's student loan relief program has faced numerous legal challenges, some of which led the Department of Education to pull the relief application offline after millions of borrowers had already signed up.
- An estimated 43 million student borrowers eligible for relief are as a result stuck in financial limbo as litigation proceeds.
Driving the news: Last week, the Biden administration asked the Supreme Court to lift a lower court ruling that blocked the program.
- A federal appeals court had again blocked President Biden's program, days after a federal judge in Texas struck it down.
- The court had also temporarily blocked the debt relief program in October in a suit brought by six Republican states — among a growing number of legal challenges against the plan.
The big picture: The Department of Education released its short online application in October for borrowers to apply for student loan forgiveness.
- The plan, which was announced in August and incited vivid responses from Republicans and Democrats ahead of the midterm elections, could cancel up to $20,000 in student debt for Pell Grant recipients and up to $10,000 for individual borrowers who make under $125,000 per year.
- "We're trying to give relief to everyday Americans," White House press secretary Karine Jean-Pierre has said about the program.
Here's where things currently stand with Biden's student loan forgiveness plan.
Legal challenges
- The libertarian Pacific Legal Foundation mounted the first known major legal challenge to Biden's plan in an attempt to block it.
- The PLF alleged that plaintiff Frank Garrison, an employee of the foundation, would "face immediate tax liability from the state of Indiana because of the automatic cancellation of a portion of his debt."
- The White House condemned the lawsuit, saying "opponents of the debt relief plan are trying anything they can to stop this program that will provide needed relief to working families."
- Another group in Wisconsin — the Brown County Taxpayers Association — argued in an application for an emergency injunction, claiming the Biden administration overstepped its executive powers in going forward with the plan.
- But Supreme Court Justice Amy Coney Barrett on Oct. 20 turned down the conservative tax group's request for lack of standing.
The bid from several GOP-led states to block the student loan forgiveness plan has seen significant court activity.
- The states sued the Biden administration in September over the plan, alleging that the program would be an overreach of Biden's executive powers and arguing that it would be financially harmful, per NBC News.
- Judge Henry E. Autrey questioned whether the scale of loan cancellation needed authorization from Congress because of the economic and political significance, a legal idea known as the “major questions” doctrine, the Washington Post writes.
Department of Education changes
- The Department of Education, amid the legal challenges, amended the eligibility of its debt relief program in September, Politico reported.
- The department said that borrowers whose federal loans are privately owned are not eligible for relief. Initially, the administration said that borrowers with privately owned loans could receive up to $10,000 or $20,000 of relief, per Politico.
- The administration also updated its guidance to specifically say that borrowers could opt out of automatic relief.
- "If you would like to opt out of debt relief for any reason—including because you are concerned about a state tax liability—you will be given an opportunity to opt out," the department said.
Estimated cost of the plan
- The nonpartisan Congressional Budget Office in September released new estimates on the cost of Biden's program, saying that it could total about $400 billion.
- CBO also estimated that the administration's plan to pause loan repayments through December would cost roughly $20 billion.
- The Department of Education separately released its own estimates on the cost of the program, saying that it'd cost an average of $30 billion a year over the next decade, with a total of $379 billion for the whole program.
Go deeper... Who student debt relief helps (and it's not who you think)
Editor's note: This story has been updated with additional developments.
