US judge rules Biden’s plan to cancel student loans unconstitutional

Texas: A Texas federal judge blocked President Joe Biden’s student loan forgiveness program on Thursday, handing a victory to a conservative advocacy group that filed a lawsuit to overturn the plan.

The decision to cancel up to $10,000 in federal student loans for many Americans has been blocked.

The Job Creators Network Foundation filed a lawsuit in October on behalf of a borrower who does not qualify for the full $20,000 debt relief and does not qualify at all .

Federal procedures “violated”

The lawsuit alleges the administration violated federal procedures by denying borrowers the opportunity to provide public comment before unveiling the program.

U.S. District Judge Mark T. Pittman, who was appointed by Donald Trump, declared the policy illegal in Thursday’s order.

It comes after the United States Court of Appeals for the 8th Circuit granted a stay of the loan forgiveness program last month in a separate lawsuit brought by six Republican-led states.

The cases are part of a growing number of legal challenges to stop Biden’s agenda. Some of those lawsuits, including one filed in Indiana and another in Wisconsin, were dismissed for lack of standing, but others are pending.

Republican attorneys general, top lawmakers and conservative groups have been discussing legal options for dismantling Biden’s plan, which they say represents an illegal overreach by the executive branch, since he announced it in August.

Court case

A week after Biden unveiled the policy, the president of the Job Creators Network — founded by Bernie Marcus, a GOP donor who co-founded Home Depot — told Fox News the group was building a legal team and working with outside advisers. to prepare for a trial. .

In the Texas case, the plaintiffs argued, in part, that the Biden administration made arbitrary decisions about who would be eligible for debt forgiveness and how much of their balance would be forgiven. Biden’s loan relief plan would forgive up to $10,000 in federal student debt for borrowers who earn up to $125,000 a year or up to $250,000 a year for married couples. Borrowers who have received Pell Grants are eligible for an additional $10,000 rebate.

Alexander Taylor, one of the plaintiffs in the case, falls below the income threshold and is eligible for a $10,000 reduction on the $35,000 in student loans he holds for an undergraduate degree from college. University of Dallas, according to the complaint. Yet because he has never received a Pell grant, a form of federal aid for low-income students, he is not eligible for the additional $10,000 given to Pell recipients.

Loans held by private entities

Myra Brown, the other plaintiff in the lawsuit, is ineligible for Biden’s plan because her federal loans, from the defunct Federal Family Education Loan (FFEL) program, are held by private entities. Until late last month, FFEL commercial borrowers like Brown could consolidate their loans into a direct loan to become eligible for Biden’s plan.

But the Department of Education reversed the policy to avoid legal challenges such as the one brought by the six states.

The decision left Brown, who owes $17,000 in student loans for an advanced degree from Southern Methodist University in Dallas, without access to the program.

In a filing with the court in response to the complaint, the Justice Department argues that the 2003 law that underpins Biden’s plan does not require notice or comment. This law, known as the Heroes Act, authorizes the Secretary of Education “to alleviate hardship that federal student loan recipients may experience due to national emergencies.”

Lawyers for justice argue that the parameters of the program have been informed by research that shows the risk of delinquency and default is acute among low-income borrowers and Pell recipients. They said Brown and Taylor were not entitled to any amount of loan forgiveness and that their grievances did not constitute a concrete injury.

About Judith J. George

Check Also

Can you refinance student loans?

Federal and private student loans can be refinanced, as long as you meet the credit …