Student loan debt relief suspended after Federal Court ruling

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It looks like it will be some time before student borrowers know if they will have some of their debt forgiven. The US Department of Justice has appealed a ruling by a Texas federal judge on Thursday that struck down the student debt relief program set up by US President Joe Biden. It could now take weeks or even months before the problem is resolved.

The judge called the program illegal, saying the Biden administration failed to follow federal procedures to solicit public comment before announcing the effort. Education Secretary Miguel Cardona pushed back, calling the program necessary and legal.

Following the ruling, the Department of Education stopped accepting pardon applications, but Cardona said that the ministry would “continue to keep borrowers informed of our efforts to provide targeted relief.”

The Biden administration’s plan would be forgive up to $10,000 in federal student loan debt for borrowers earning less than $125,000 per year (or $250,000 for married couples). Recipients of a Pell grant for low-income students would have a debt of $20,000 erased.

Biden implemented the student loan cancellation plan with an August decree. The administration pointed to the COVID pandemic and a federal law it says empowers the education secretary to ease the burden borrowers may experience due to a national emergency.

But a Texas lawsuit filed on behalf of two plaintiffs by a conservative group called the Job Creators Network Foundation argued that the administration failed to follow federal administrative procedure law when rolling out the program.

The case now goes to the 5th US Circuit Court of Appeals. An attorney for the National Consumer Law Center told CNN the matter could eventually go all the way to the Supreme Court.

More than 26 million borrowers have applied student loan debt reliefwith 16 million claims already approved and pending court approval for debt cancellation, Cardona said.

Last month, in another case, the student loan cancellation plan was temporarily put on hold by a federal appeals court as it considers a challenge to the program by six Republican-led states.


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