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Biden’s plan to clear student debt is stalled. What borrowers need to know


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For those with student debt, the past few months can hurt.

First, President Joe Biden said in August that he would forgive up to $20,000 to millions of borrowers. But before much celebration could happen, Republicans had launched a series of challenges to the policy, putting it in jeopardy even after a bailout application was filed. use. Since mid-October, 22 million Americans have applied for forgiveness.

The biggest obstacle to the Biden administration’s far-reaching plans, however, came on Friday, when a US appeals court temporarily block it from moving forward.

Here’s what borrowers need to know about growth and what it could mean for your student debt.

Why is student loan forgiveness on hold?

In September, attorneys general from Republican-led states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina – to sue Biden administration in an effort to block a plan to cancel hundreds of billions of dollars in student debt.

U.S. District Judge Henry Autrey of St. Louis earlier this month ruled that although the states had raised “significant and significant challenges to the debt relief plan,” they ultimately lacked the legal standing to pursue the case.

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The GOP-led countries did not give up after their lawsuit was brought. They filed an appeal and asked the court to uphold the president’s plan, which is expected to begin implementation as early as this week, while their request is reviewed.

The 8th U.S. Court of Appeals accepted the states’ emergency petitions, making it impossible for the Biden administration to begin forgiving any student debt now.

What is the state’s argument against forgiveness?

Countries led by the GOP are accusing the president of exceeding his powers.

They also said the move would put some private lenders out of business as it would push millions of borrowers with their federal loans to these companies to consolidate their debt into the program. The main federal student loan program.

The U.S. Department of Education has said borrowers holding this FFEL, or Federal Family Education Loan, can take this step to qualify for relief.

What is the probability of their challenge succeeding?

Experts say the main obstacle for those hoping to block the president’s action is finding a plaintiff who can prove they have been harmed by the policy.

“Such injury is necessary to establish what courts call ‘standing’,” The Laurence . tribe, a Harvard law professor. “No individual, business or state is hurt the way private lenders would if, for example, their student loans were cancelled.”

Legal experts say GOP-led countries will struggle to prove they have the necessary standing.

President Biden announces plan to forgive student debt

The Department of Education, in defense of its broader debt forgiveness policy, has now said that FFEL borrowers need to aggregate their loans by the end of September to qualify. They can no longer do so to qualify.

This will make it difficult for GOP states to make their case that the president’s plan will cost private lenders a significant amount of business, said higher education expert Mark Kantrowitz.

“The state attorney general case was the strongest one until the U.S. Department of Education pulled the rug out by removing their legal status,” Kantrowitz said.

To what extent can this delay forgiveness?

All the U.S. 8th Circuit Court of Appeals did on Friday was to freeze the president’s plan until it decides whether to keep it during the states’ appeal, explains Stephen I. Vladecka professor at the University of Texas School of Law.

“It wasn’t a big decision for myself,” Vladeck said.

The real question, he said, will be what happens later this week when the court rules “how the status quo will be while the states’ appeals move in its direction.”

“I think it was an uphill battle for the states when the district court concluded that it lacked standing,” Vladeck said.

Can I still ask for forgiveness?

Sure. The US Department of Education is urging student loan borrowers to continue to seek relief.

“Tonight’s interim order does not prevent borrowers from applying for student loan forgiveness at studentaid.gov“White House press secretary Karine Jean-Pierre said in a statement Friday.” It also does not prevent us from reviewing these applications and preparing them for referral to loan service providers. “

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