Student Loan Forgiveness Blocked For Now Due to Court Rulings

Biden's student loan debt forgiveness program is on hold until the U.S. Supreme Court can weigh in.

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President Biden’s student loan forgiveness application officially launched in October and millions of borrowers applied for student loan debt relief. But, as you may have heard, Biden’s plan to forgive up to $20,000 of student loan debt for eligible borrowers is currently facing several legal challenges. The plan is currently blocked by the 8th Circuit Court of Appeals and a federal judge in Texas ruled that Biden’s student loan forgiveness program is unconstitutional. As a result, the Biden administration is not currently accepting new applications for student loan debt relief. 

However, if you have already applied for student loan forgiveness, a Biden spokesperson says they will hold onto your application, while the case proceeds through the courts. And, if you have been approved for student loan relief, the Department of Education will send you an email regarding your approved stratus and the hold on forgiving student loan debt.

The Texas ruling and the court pause will delay the processing of student loan relief applications, at least for a while. The U.S. Supreme Court announced December 1, that it will take up the dispute in February. Meanwhile, the Biden administration has extended the student loan payment pause until at least June 30, 2023. 

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So, if you're wondering what is going on with student loan forgiveness and what to expect, here is some information on the legal challenges involved.

Texas Court Ruling Blocks Student Loan Forgiveness--For Now

A federal judge in Texas ruled that Biden’s student loan forgiveness program is unconstitutional essentially because the judge believes that the program is an illegal overreach of Presidential power.

Legally speaking, the Texas ruling vacated Biden’s student loan forgiveness plan, but that didn't change the current situation with student loan forgiveness. That’s because student loan forgiveness was already on hold due to another court order that blocked the federal government from forgiving student loans. The Texas ruling though, was the latest in a string of challenges to Biden’s student loan forgiveness program in the last couple of months.

So, what does the Texas judge’s ruling about student loan forgiveness mean for you? The Biden administration had previously said that you could apply for student loan forgiveness if you haven’t already done so. But because of that ruling, the application for student loan forgiveness is blocked until further notice. That means that the federal government won't be accepting new applications for now, and won't be forgiving any student loan deb--for now.

It's important to note that litigation takes time. And so far, although a federal judge has ruled against the student loan debt forgiveness program, there’s a way to go with legal appeals before we know the final legal word concerning the constitutionality of Biden’s student loan forgiveness plan. 

But the acceptance and processing of student loan applications will be on hold until legal disputes over the program are settled. So that understandably raises questions and concerns about what borrowers can expect.

Which Other States Sued to Block Student Loan Forgiveness?

In a case separate from the Texas lawsuit, the 8th Circuit Court of Appeals blocked Biden’s student loan forgiveness plan, which also means that the Biden administration cannot—for now—cancel student loan debt until the court can consider legal arguments from both sides. 

Six Republican-led states are challenging the program in court, arguing that the Biden’s student loan forgiveness would harm student loan companies. The states that are suing to block student loan forgiveness include: Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina.

The federal court order pausing student loan debt cancellation has so far delayed the processing of student loan debt relief (i.e., the Biden administration has to wait to actually cancel student loan debt). 

What To Do About Blocked Student Loan Debt Relief

What can you do about your student loan debt relief application? For now, whether you've already applied or not, stay tuned to updates about student loan debt relief. If you applied for relief and are approved, you should receive an email from the U.S. Department of Education explaining that you are approved, but that student loan forgiveness is on hold due to legal disputes. Student loan payments are paused until at least June 30, 2023, and so won't resume in January.

The Biden administration also encourages borrowers to sign up for updates and get information at studentaid.gov.

Kelley R. Taylor
Tax Editor, Kiplinger.com

With more than 20 years experience as an in-house legal counsel and business journalist, Kelley R. Taylor has contributed to numerous national print and digital magazines on key issues spanning education, law, health, finance, and tax. Kelley particularly enjoys translating complex information in ways that help empower people in their daily lives and work.