Biden asks Supreme Court to reinstate student loan forgiveness – here’s the update on the program – Forbes | Vette Leader

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The Biden administration on Friday asked the Supreme Court to reinstate its student loan forgiveness program after it was blocked by a lower court — one of two legal challenges that will ultimately determine the fate of the program as the debt of Millions of borrowers are at stake.

Important facts

The Biden administration has asked the Supreme Court to either vacate an injunction from the 8th Circuit Court and reinstate the program while the court challenges expire, or open the case for hearing and make a final decision on the legality of the program.

The White House argued that Republican-led states had no jurisdiction to challenge the policy and the Eighth Court had no jurisdiction to block it, arguing that its injunction “leaves millions of economically vulnerable borrowers in limbo.”

The White House is asking the court to make a quick decision that would allow debt relief to be reinstated while the appeals process is pending, and has asked the Supreme Court to hold oral arguments during this term and make a final decision to resolve the matter meeting.

The Biden administration must win two cases to move forward with forgiveness: the case in question on Friday and a second legal challenge in Texas.

If both the Supreme Court and the 5th Circuit Court, which covers Texas, rule quickly in Biden’s favor, the program could resume within weeks as the litigation moves forward. Otherwise, it could take months for cases to close before borrowers can see relief.

What to look out for

The Biden administration has also asked the 5th Circuit to rule in the Texas case brought by the conservative Job Creators Network Foundation on behalf of two student loan borrowers. The White House has asked the 5th Circuit to block a decision in the case that struck the forgiveness of the student loan as unlawful while the case is being appealed, and requested that the court rule by December 1. If the 5th Circuit is known to be one of the most conservative courts in the country — rulings against the Biden administration, the White House has already said it will also take the case to the Supreme Court.

Big number

43 million. That is the number of federal student loan borrowers who are eligible for the student debt relief program at issue. Of those, Secretary of Education Miguel Cardona said, 26 million applied for debt relief before applications were suspended Nov. 11 following the Texas court ruling, and 16 million applications have been approved so far.

What we don’t know

What will happen to borrowers if debt relief is not reinstated? The Biden administration still hasn’t decided whether to extend the moratorium on student loan repayments again or resume it in January as planned, telling the 5th Circle on Thursday that it now faces an “unnecessary dangerous choice” with students faces loan forgiveness. The resumption of payments could be damaging to borrowers, especially as the administration warned in a court filing on Wednesday that it believes the number of borrowers defaulting on their loans will rise by a “historically large” margin, without that student loans are granted. That’s partly because of the confusion over whether or not the program is in place, as some borrowers are unlikely to make payments because they feel they don’t have to. However, withholding payments would cost the administration “several billion dollars a month in missed payments,” the White House told the 5th Circuit.

tangent

There has been some good news for borrowers over the past few days when it comes to debt relief for individual borrowers in tighter situations. The Justice and Education departments announced Thursday that they are changing the way people who file for bankruptcy seek to pay their student loan debts. The Associated Press notes that the previous system rarely resulted in borrowers being relieved of their debt because there was a higher debt relief threshold for student loans compared to other debt, but it may be easier going forward under the new guidelines . Also approved on Thursday was a $6 billion settlement between the federal government and student loan borrowers who claim to have been cheated by their universities, such as those who attended for-profit colleges.

key background

The Biden administration announced in August that it would forgive borrowers earning less than $125,000 ($20,000 for Pell Grant recipients) $10,000 in federal student debt, and while applications for the program opened in October, no funds had been disbursed before it was blocked by the court. The White House justified the program with the federal HEROES Act, which allows the Secretary of Education to “waive or change” student financial assistance programs during national emergencies, as the Biden administration argued the Covid-19 pandemic. Republicans had heavily criticized the forgiveness policy, arguing it exceeded the Biden administration’s authority, and had filed a series of lawsuits to block it.

Surprising fact

Judge Amy Coney Barrett has previously upheld the student loan waiver in response to two other lawsuits filed in the Supreme Court, but those cases had different circumstances and were seen as weaker legal challenges than the two at issue now. Barrett, the judiciary that oversees cases coming from this particular federal circuit court, has also decided the cases themselves without referring them to the Supreme Court, so it’s not yet known where the other justices stand and how the conservative 6- 3 court will decide.

Further reading

Biden administration will ask Supreme Court to reinstate student loan forgiveness program (Forbes)

Biden’s student loan forgiveness plan on hold as court squabbles with GOP states (Forbes)

Biden’s Student Loan Assistance Program Blocked by Texas Federal Judge (Forbes)

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