TThe Department of Education stopped accepting new applications for student debt forgiveness after a federal judge in Texas blocked the plan, ruling that the program was an “unconstitutional exercise of Congress’ legislative authority.”
The decision is the most significant setback for the program so far faced numerous legal challengesdelaying up to $20,000 per person in debt forgiveness for 40 million borrowers.
“Courts have issued orders blocking our student debt relief program,” he said federal student aid website says. “As a result, we are not currently accepting applications. We seek to set aside these orders.
The White House said 26 million borrowers have already applied for debt relief, and 16 million of those applications have been approved so far. “The department will retain their information so that it can quickly process their relief after we prevail in court,” White House press secretary Karin Jean-Pierre said in a statement.
Legal experts expressed skepticism in this regard each claimant has legal standing— meaning they suffered concrete, imminent harm — to effectively challenge the student loan forgiveness program. Several judges have dismissed other cases for lack of standing, but this latest decision changed that pattern.
This case filed by Job Creators Network Foundation, alleged that the debt forgiveness program violated the Administrative Procedure Act by failing to seek public comment on the plan and harming two plaintiffs who did not qualify for debt forgiveness. One plaintiff has student loans that are now private and non-forgivable. The second plaintiff was only eligible for $10,000 in debt forgiveness, not $20,000, because he did not receive a Pell Grant designed to help low-income students attend college.
“Plaintiffs request an opportunity to present their views to the Department and provide additional comments on any proposal by the Department for student loan debt forgiveness,” the lawsuit states, calling their exclusion from relief “irrational, arbitrary and unfair.”
U.S. District Judge Mark Pittman agreed, ruling that they have standing to sue because they do not qualify for debt forgiveness and were denied the right to comment on it.
“Plaintiffs successfully asserted a denial of due process,” Pittman said in his decision.
The Justice Department appealed the decision, and now the 5th Circuit Court of Appeals will hear the case.
Tara Grove, a professor at the University of Texas Law School who focuses on the federal judiciary and the separation of powers, said the question of legal standing is still up for debate as this case moves forward on appeal. “It’s hard to have the right to challenge this program,” says Grove.
“It basically comes down to, ‘Well, can I complain about other people getting benefits?'” she says. “This is not a situation where they were not allowed to apply for benefits. They just didn’t meet the requirements of the program.”
Grove believes the Biden administration’s best argument is that the plaintiffs lack standing to sue, noting that the government’s argument about the legal justification for the policy may be more difficult to defend.
That suit, like several others, alleges that Biden lacked the authority to provide widespread debt relief. The Biden administration justified the plan under the Higher Education Opportunities for Students (HEROES) Act of 2003, which gives the Department of Education the ability to change student financial aid programs during a “national emergency.” The Biden administration says the COVID-19 pandemic is such an emergency.
In his ruling Thursday, Pittman said the HEROES Act “does not provide the executive branch with clear authorization from Congress to create a $400 billion student loan forgiveness program.” (September Congressional Budget Office report predicts the plan will cost about $400 billion.)
“In this country, we are not run by an all-powerful executive with a pen and a phone,” he said.
Cody Hunanian — executive director of the Center for the Student Debt Crisis, a nonprofit that advocates against student loan debt — says the center has heard from many borrowers who saw debt relief as “a light at the end of the tunnel ‘ and now they are disappointed that it remains in a legal impasse.
“I share many of the sentiments other borrowers are feeling. I am incredibly disappointed. I have a sense of uncertainty and confusion about what the future holds in store,” says Hunanian, who applied for debt relief immediately after the site launched. “It makes it hard to plan for the future.”
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