President Joe Biden’s plans for student loan cancellation, as well as his decision to end the pause on federally-held student loan payments and interest accrual, have been complicated by legal challenges over the last few days.
On Monday a federal appeals court, which had halted the Department of Education (ED) from discharging any debt while a lawsuit was under consideration, formally blocked the administration’s debt cancellation plan in a 3-0 decision. The department has not shared whether it plans to appeal the decision, though it is likely to do so.
The court also stated that its previous injunction, prohibiting any debt cancellation, will remain in effect until there is further order from the panel or the case is considered by the Supreme Court.
Prior to Monday’s ruling, and following the news that a federal judge declared the president’s program to be “unconstitutional,” a group of left-leaning organizations had called on the administration to offer another extension of the payment pause, past Jan. 1, 2023, to ensure that borrowers who were expecting loan cancellation will not be abruptly forced to return to repayment.
The Student Debt Crisis Center wrote a letter with a petition calling on the administration to offer another extension of the payment pause that Biden has continued to extend throughout his term. The petition has collected over 46,000 signatures within its first 48 hours.
“For three years, borrowers have been a political punching bag facing uncertainty about the future of their student loans,” Natalia Abrams, president of the Student Debt Crisis Center, said in response to the recent court ruling. “The judge’s decision makes the future even more worrisome. President Biden must pause payments further into the future to provide financial stability and peace of mind to 40 million Americans.”
The sentiments of the letter were largely backed by Randi Weingarten, president of the American Federation of Teachers (AFT).
“Alongside an appeal in this case, the administration should also consider further mechanisms to promote fairness, including a delay in the resumption of loan payments next year,” Weingarten said.
ED has appealed the ruling handed down on Friday, but has also been forced to take down the application for the program. Federal Student Aid (FSA) is currently displaying a message on its website that the department is seeking to overturn the ruling and for the time being is “not accepting applications.”
According to Education Secretary Miguel Cardona, 26 million borrowers had already applied for relief, and more than half of those applications have already been approved and sent to loan servicers "to be discharged when allowed by the courts."
Stay tuned to Today’s News for more developments.
Publication Date: 11/15/2022