The Biden administration has stopped accepting applications for its student loan forgiveness program, citing Thursday’s decisionwhich declared the program “illegal”.
On Friday, the Education Department’s Student Loan Relief website displayed a message informing borrowers that “Student Loan Debt Relief is blocked.” It said, “The courts have issued orders to block our student loan relief program. As a result, at this time, we are not accepting applications. We are seeking a reversal of those orders.”
The Department of Education said it would apply for the nearly 26 million people who have already applied for an amnesty.
The closing of the application marks a departure from the Education Department’s previous stance following an October court ruling that put a temporary moratorium on the program in response to an emergency motion brought by lawyers for several Republican-led states. Following that decision, the Biden administration continued to keep the application open because the stay only blocked the discharge of the debt. It encouraged borrowers to apply nonetheless.
Higher education expert Mark Kantrowitz said Texas’ governing “emptying out the entire program so they can’t let borrowers continue to apply,” adding that he estimates about 38 million people can apply for the debt relief program. are eligible. “The 12 million who haven’t submitted an application yet can’t submit an application now.”
US District Judge Mark Pittman’s ruling, which was appointed by former President Donald Trump, was in response to a lawsuit by a conservative group called the Job Creators Network Foundation, which argued that the Biden administration had violated federal procedures by failing to seek public input. Violated. Program.
Pittman declared the program “illegal,” citing the Higher Education Relief Opportunities for Students Act (Heroes) of 2002, which gives the Department of Education the ability to exempt recipients of financial aid.
“It is not the role of this Court to determine whether a program constitutes good public policy,” Pittman wrote in his ruling. “In this country, we are not ruled by an almighty executive with a pen and a phone.”
The Biden administration said it plans to appeal the decision, but the legal process could take weeks to go through. The Fifth Circuit Court of Appeals will hear the case. In a Friday research report, Height Securities noted that the circuit has become “arguably one of the most conservative appeals courts in the country.”
Following the decision of the Court of Appeals, both sides are likely to appeal to the Supreme Court, where Justice Samuel A. Alito, a conservative, will review the case first, Height Securities said.
Whatever the outcome, the legal process can take time to unfold, Kantrowitz said. This could spell a financial crisis for many borrowers as the student loan repayment interval ends in December, meaning repayment will resume in January.
If the case is resolved in favor of the Biden administration before the end of the year, it is possible that some of the 26 million people who applied before the end of the year could have their debts forgiven before January. But the 12 million people who haven’t submitted applications yet could be on the hook for repayment as early as 2023 because the Department of Education and loan officials may not have enough time to process new applications before January Yes, Kantrowitz said.