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Explainer: Where does the student loan debt plan stand?
How the forgiveness plan works
The debt forgiveness plan announced in August would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would get an additional $10,000 in debt forgiven.
College students qualify if their loans were disbursed before July 1. The plan makes 43 million borrowers eligible for some debt forgiveness, with 20 million who could get their debt erased entirely, according to the administration.
The Texas case
Pittman — an appointee of former President Donald Trump based in Fort Worth, Texas — made it clear that he felt Biden overstepped his authority. He said the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act, did not provide the authorization for the loan forgiveness program.
The law allows the secretary of education to waive or modify terms of federal student loans in times of war or national emergency. The administration said the COVID-19 pandemic created a national emergency.
The plan faces many other legal challenges
In September, the Republican-led states of Nebraska, Iowa, Kansas, Missouri, Arkansas and South Carolina filed suit to halt the program, arguing that the pandemic no longer qualifies as a national emergency. Justice Department attorney Brian Netter disagreed, telling U.S. District Judge Henry Autrey in October that student loan defaults have skyrocketed over the past 2 1/2 years.
Autrey ruled on Oct. 20 that the states lacked standing, allowing the forgiveness plan to proceed. But the 8th Circuit temporarily halted it the next day while it considers a permanent block. That decision is still pending.
The Texas ruling was a bigger blow to the plan
Pittman's decision strikes down the underlying legal argument used to justify Biden's plan. Previously, the White House has been able to dodge legal attacks made in lawsuits by tweaking details of the program.
One lawsuit argued that the automatic debt cancellation would leave borrowers paying heavier taxes in states that impose a tax on canceled debt. The administration responded by allowing borrowers to opt out. Another suit alleged that Biden's plan would hurt financial institutions that earn revenue on certain kinds of federal student loans. The White House responded by carving those loans out of the plan.
Supreme Court-bound?
The legal situation is complicated because of the numerous lawsuits. It's likely that the Texas case and the lawsuit filed by the six states will be appealed to the Supreme Court. Before it reaches that level, the 5th and 8th Circuit appeals courts — both dominated by conservative judges — will rule separately in each case.
The case before the 8th Circuit could end up in the Supreme Court soon, since the six Republican-led states have asked the appeals court to keep the program on hold while the case plays out. If the appeals court grants that request, the administration will likely ask the Supreme Court to intervene. The states also could go to the high court if their request is denied.
Common search: 'Is student loan forgiveness canceled?
Borrowers are confused about whether their debt will be canceled, or if they'll have to resume making payments on Jan. 1, when a pause prompted by the COVID-19 pandemic is set to expire.
After the Texas ruling, many hit the internet, asking Google: "Is student loan forgiveness canceled?" Overall search traffic for "student loan forgiveness" quadrupled Thursday night and had increased nearly tenfold by Friday morning, according to Google Trends data.
