Student Loan Forgiveness Status: 6 Updates After Multiple Courts Issue Adverse Decisions

The Biden administration was dealt another legal setback as a second federal court ruled against the President’s one-time student loan forgiveness program this week.

Biden’s initiative would have provided millions of borrowers with $10,000 or more in one-time student loan forgiveness. But no borrower has been granted any loan cancellation under the initiative following a series of legal challenges and adverse court rulings against the administration.

Here’s where things stand, and what borrowers should know about the status of student loan forgiveness.

8th Circuit Rules Against Biden Administration in Challenge to Student Loan Forgiveness Program

The 8th Circuit Court of Appeals dealt another significant blow to Biden’s sweeping student loan forgiveness initiative on Monday.

A coalition of Republican-led states appealed to the 8th Circuit after a lower court had dismissed their claims that Biden’s student loan forgiveness program deprives the states, via state-affiliated FFELP lenders, of revenue. In response to the appeal, the 8th Circuit temporarily blocked the student loan forgiveness program as it considered whether to impose a longer-lasting preliminary injunction. In the interim, attorneys for the Biden administration submitted additional evidence that suggested that at least one major FFELP lender, MOHELA, was not actually actively participating in the suit.

But the 8th Circuit, in a 3-0 ruling on Monday, sided with the state coalition and granted the preliminary injunction “until further order of this Court or the Supreme Court of the United States.” The court did not rule on the merits of the case, but did rule that the parties have standing to sue (a key point of dispute). The Court also suggested that the suit raised “substantial questions of law which remain to be resolved.” The preliminary injunction blocks the program while the litigation continues.

Ruling Follows Another Federal Court Decision Striking Down Biden’s Student Loan Forgiveness Program

As a practical matter, the 8th Circuit’s decision may not have much of an immediate impact for borrowers. That’s because the ruling follows a decision last week by a federal court in Texas that struck down the program on the merits.

In that suit, a conservative nonprofit organization argued that the administration did not follow proper procedures under the Administrative Procedures Act (APA) for establishing the new initiative. The court found that Biden’s plan was “an unconstitutional exercise of Congress’s legislative power and must be vacated.”

Biden Administration Will Appeal

The Biden administration indicated it would appeal the Texas court decision last week. As of this writing, the administration has not yet commented on whether it will appeal the 8th Circuit’s ruling.

“The President and this Administration are determined to help working and middle-class Americans get back on their feet, while our opponents – backed by extreme Republican special interests – sued to block millions of Americans from getting much-needed relief,” said White House Press Secretary Karine Jean-Pierre in a statement last week.

The dispute may ultimately end up before the U.S. Supreme Court. While an appeal of the Texas decision would first go before the 5th Circuit Court of Appeals, the administration could appeal the 8th Circuit’s decision directly to the Supreme Court.

Student Loan Forgiveness Application Is No Longer Operating

As a result of the adverse court rulings, borrowers can no longer submit an application for the one-time student loan forgiveness program.

“Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications,” reads a message on the application website.

The Biden administration had received 26 million student loan forgiveness applications before the adverse court rulings. And the Education Department had already approved 16 million of those applications. But now, it is unclear when any of these borrowers will receive the relief, or whether the relief will arrive at all.

Biden Could Extend the Student Loan Payment Pause

With Biden’s student loan forgiveness plans stymied by federal courts, advocates are now turning their attention to the national student loan payment pause, which is set to end on December 31. The pause — which also froze interest and suspended collections efforts — has now been in effect since March 2020, following several extensions by President Trump and President Biden over the last three years.

Top Biden administration officials had characterized the latest extension of the student loan pause as the “final” such extension. And Biden had tied the resumption of payments in January to his one-time student loan forgiveness program, announcing both during the same press conference.

But with the future of his one-time cancellation program in doubt, advocates are pushing the Biden administration to extend the payment pause yet again. It is unclear whether officials are considering such an extension.

Other Student Loan Forgiveness Programs Remain Available

While Biden’s one-time student loan cancellation program is in serious peril, a number of other loan forgiveness and relief programs remain available to borrowers. This includes Public Service Loan Forgiveness (PSLF), a new IDR Account Adjustment, Borrower Defense to Repayment, and disability discharges. The administration is also working on developing a new income-driven repayment plan, which could provide new relief to borrowers next year.

Further Student Loan Forgiveness Reading

The Chances That Biden Will Extend The Student Loan Pause Just Went Up — But Questions Remain

Biden Student Loan Forgiveness Plan Is In Peril: Key Takeaways After Court Rules It’s Illegal

Can You Apply For Multiple Student Loan Forgiveness Programs? Yes — With Some Caveats

A New, Bigger Student Loan Forgiveness Initiative Is Set To Launch — And It’s Not The One That You Think