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Student-loan borrowers should not resume payments in January after federal courts have blocked the relief, advocates say

Nov 15, 2022, 03:10 IST
Business Insider
President Joe Biden.Kevin Dietsch/Getty Images
  • Two federal courts have blocked Biden's student-loan forgiveness plan so far.
  • While Biden is appealing the decisions, the process could take months.
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Student-loan borrowers are at risk of resuming student-loan payments in under two months without the debt relief they were promised.

Just over a month after President Joe Biden announced up to $20,000 in student-debt cancellation at the end of August for federal borrowers making under $125,000 a year, he made available an online application for borrowers to apply for the relief. Since then, 26 million borrowers have submitted forms to get the relief — but due to decisions from federal courts, those borrowers are now in legal limbo.

On Thursday, a federal judge in Texas sided with two student-loan borrowers who sued Biden's loan forgiveness because they didn't qualify for the full amount of relief, blocking the plan from being implemented as Biden's Justice Department appeals the decision. On Monday, the 8th Circuit Court of Appeals ruled that the temporary paused it placed on Biden's debt relief will remain in place, following a lawsuit filed by six Republican-led states who sued because they argued the relief would hurt their states' tax revenues. The administration will likely appeal this decision as well.

These legal challenges could delay the implementation of Biden's debt relief for months — potentially extending into next year, when student-loan payments are scheduled to resume. Advocates say that can't happen.

"It is shameful, but not surprising, that a federal judge would side with the MAGA Republicans who appointed him, rather than the 26 million borrowers who have applied for life-changing loan forgiveness," Randi Weingarten, president of the American Federation of Teachers, told Insider. "And it is telling that the special interests fighting forgiveness in this case were nowhere to be seen when President Trump suspended payments at the height of the pandemic."

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"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," she added.

Persis Yu, deputy executive director of the Student Borrower Protection Center, said in a statement last week that following the lawsuits, the Biden Administration "cannot now resume payments on January 1st. It must use all of its tools to fight to ensure that borrowers receive the debt relief they need."

When contacted for comment on another potential extension of the student-loan payment pause, the Education Department pointed Insider to a statement Education Secretary Miguel Cardona made last week, in which he said that "we believe strongly that the Biden-Harris Student Debt Relief Plan is lawful and necessary to give borrowers and working families breathing room as they recover from the pandemic and to ensure they succeed when repayment restarts."

Alongside the August announcement of broad student-loan forgiveness, the department announced the "final" extension of the student-loan payment pause through December 31. Still, given that the department told borrowers the goal was to have their relief processed before payments resume, advocates are hoping borrowers won't be thrown into repayment too soon.

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