Wednesday, November 30, 2022

Justice Department argues Biden administration’s student debt relief program is lawful

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The Justice Department has filed its response to an appeals court’s decision to pause the Biden administration’s student debt relief program, arguing that the program is lawful and that the states lack standing to intervene and the pause puts public interest in jeopardy.

But if the court must put the program on hold, pending appeal, the department argues that the court should only do so in states where state attorneys general sued. 

On Friday, the 8th Circuit issued a temporary stay in response to an emergency motion brought by attorneys for several Republican-led states, after a lower court had ruled that their September lawsuit to stop the debt forgiveness program lacked standing.

The attorneys general for Iowa, Kansas, Missouri, Nebraska, South Carolina and Arkansas said the student debt forgiveness program will irreparably harm their states’ student loan programs. 

The stay is not based on the merits, but allows for further briefings on the issue this week.

U.S. Supreme Court on Thursday declined an emergency appeal by a group of Wisconsin taxpayers who had also challenged the plan in a separate lawsuit.

President Biden announced in August that his administration is canceling up to $20,000 in student loan debt for millions of Americans. Nearly 20 million people will be eligible to have their debt fully canceled under the new plan.

Borrowers who received Pell Grants, aid for eligible low- and middle-income families, can get as much as $20,000 in debt forgiven, while other borrowers can get relief of up to $10,000. Only individuals who earned less than $125,000 in 2020 or 2021 and married couples with total annual income below $250,000 are eligible for loan relief under the program.

The Biden administration said it will continue to review applications for debt relief that it has already received and prepare them for transmission to loan servicers as it waits for the courts to make a final decision.

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