Student loan borrowers aren’t likely to get relief from their debt as planned in this calendar year, thanks in part to a lawsuit filed by six Republican-led states.
The lawsuit claims that those who received debt relief from the PPP program could be harmed as a result of The Biden Administration’s student loan forgiveness program. A judge appointed by former Republican President Donald Trump issued a ruling earlier this month calling the loan forgiveness “illegal.”
As a result of the decision, the Department of Education has paused new applications for relief.
President Joe Biden, today, in a video posted to Twitter, said he has asked the Department of Education to extend the pause to 30 days after litigation is resolved or no later than June 30, 2023.
I’m confident that our student debt relief plan is legal. But it’s on hold because Republican officials want to block it.
That’s why @SecCardona is extending the payment pause to no later than June 30, 2023, giving the Supreme Court time to hear the case in its current term. pic.twitter.com/873CurlHFZ
— President Biden (@POTUS) November 22, 2022
“I’m confident that our student debt relief plan is legal. But it’s on hold because Republican officials want to block it,” Biden said.
Student loan payments were scheduled to resume in January. Payments have been on pause since March 2020.
“Once again, the White House has done the right thing by continuing to protect student loan borrowers – all while Republicans and their billionaire backers fight to steal that much needed student loan relief from the more than 26 million people who are set to receive it,” said Melissa Byrne, a student loan activist and executive director of We The 45 Million. ”This pause extension is critical because we simply cannot return to repayment until after cancellation of debt occurs.
“Thank you President Biden. Thank you for fighting for us.”
Research: Policymakers should work to ‘bolster all available pathways to debt cancellation’
A report by the Student Borrower Protection Center, Dr. Daniel Collier and Dr. Dan Fitzpatrick looked at how the Public Service Loan Forgiveness Program or any other program has spillover effects across nearly every area of the borrowers’ lives, including a wide range of financial, psychological and behavioral measures.
“This report is one step towards understanding the benefits of student loan forgiveness under PSLF or any other program,” said Collier and Fitzpatrick, the authors of the paper. “As such, we’ve found that receiving loan forgiveness through PSLF comes with important financial and well-being benefits. However, being on the path to forgiveness does not give a proportional share of those benefits; borrowers with loan balances still several years out from forgiveness show some stress measures that are legitimately concerning.”
Using new survey data collected from August to September, the researchers behind today’s paper found the following:
- Borrowers’ rates of homeownership increased linearly as they approached and arrived at cancellation.
- Borrowers’ FICO scores improved as they approached cancellation and jumped up after they achieved it.
- Borrowers near cancellation reported lower psychological distress, and borrowers who had achieved cancellation reported the lowest levels.
The research, according to a news release, advocates that policymakers must work to bolster all available pathways to debt cancellation.
View the full report online at https://protectborrowers.org/wp-content/uploads/2022/11/Jubilee-and-Jubilation.pdf
Next steps
The Department of Education has asked the Supreme Court to reinstate the student loan forgiveness program while challenges to the relief play out.
If the appeals court or Supreme Court overturns the lower court’s ruling, the Biden administration could then begin to cancel debt as outlined in the program.
The program will forgive up to $10,000 of federal student loan debt for individuals who earned less than $125,000 in 2020 or 2021, or married couples or heads of households who made less than $250,000.
If Biden’s program is allowed to move forward, individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years could see up to $10,000 of their federal student loan debt forgiven. Pell grant recipients may be eligible for $20,000 in debt forgiveness.
Related stories
Biden student loan forgiveness on hold after Texas judge calls relief ‘illegal’
Federal judge blocks Republican-led challenge to Biden’s student-debt relief plan
Student debt relief application site open, ‘gamechanger for millions of Americans’
Group demands student loan giant end plan to deny student debt relief in California
Department of Education: Update on student debt relief plan sent to borrowers
White House: Most student-loan borrowers in line for $10k in relief
Share
Crystal Graham
