The Biden administration's student loan forgiveness program suffered a major setback on November 10 when Texas federal court judge Mark Pittman halted its implementation and ruled that the plan to provide loan borrowers with up to $20,000 in relief money was unlawful.
The decision, which also caused StudentAid.gov to remove the application, was made only days before millions of Americans were expected to receive their first batch of payments and before loan repayments were scheduled to start in January 2023.
Court Extends Block on Biden's Student Loan Forgiveness Plan
The likelihood that President Joe Biden would declare another suspension of repayments before the deadline of December 31 has increased in light of the most recent incident, according to GoBankingRates.
One of Biden's objectives for the student debt relief program, which was initially unveiled in August, was to finally halt loan payments prohibitions that had been repeatedly extended throughout the pandemic.
The plan was to eliminate a sizable chunk of outstanding debts by giving almost 45 million qualified debtors relief money ($10,000 for most applicants, $20,000 for low-income Pell Grant recipients), making monthly payments more manageable when they did ultimately restart.
However, because that financing has already been suspended, Biden could feel pressured to act and once more declare an extension on repayments, particularly if pressure from advocacy organizations grows.
The implementation of Biden's debt relief might be delayed by many months, possibly even until the start of next year, when student loan payments are expected to restart. Advocates assert it is not possible.
Should Student Loan Borrowers Resume Paying Debt?
The Biden Administration "cannot now resume payments on January 1st. It must use all of its resources to battle to guarantee that borrowers receive the debt relief they need," according to Persis Yu, deputy executive director of the Student Borrower Protection Center, in a statement last week.
The Education Department referred Insider to a statement made by Education Secretary Miguel Cardona last week when asked about the possibility of another extension of the student loan payment suspension, as per Insider via MSN.
Cardona stated that "we believe strongly that the Biden-Harris Student Debt Relief Plan is lawful and necessary to give borrowers and working families breathing room as they recover from the pandemic and to ensure they succeed when repayment restarts."
Along with the comprehensive student loan forgiveness announced in August, the department also announced the "final" extension of the student loan payment suspension until December 31. Advocates, however, are optimistic that borrowers won't be forced into payback too quickly given that the government informed homeowners that the objective was to get their relief approved before payments start.
The US Department of Education referred Fortune to a November 11 statement on its website in which it stated it was "committed to taking further efforts to remedy long-standing flaws in the student loan forgiveness system," but did not mention maintaining the payment halt.
The 5th Circuit Court of Appeals will hear the case since the Biden administration is appealing the ruling. Borrowers are concerned about other ongoing cases as well. In response to a challenge from six Republican-led states, the 8th US Circuit Court of Appeals in St. Louis imposed a countrywide order temporarily banning forgiveness.
Both cases may end up to the US Supreme Court, thus postponing the program for a few more weeks or months. The remedy scheme has already been repeatedly rejected by the Supreme Court. But new suits continue to arrive.
Before the administration was compelled to cease accepting applications last week, over 26 million individuals had submitted requests for relief since the debt forgiveness application launched available on October 17. Of them, over 16 million had received approval.
Related Article : Student Loan Forgiveness Canceled? Here's What Will Happen to Applications After Shocking Ruling from Texas Judge
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