Biden Student Loan Forgiveness Update: What About Private Student Loans?
President Biden proposed a plan to erase millions of dollars in student loan debt. Millions of student loan borrowers are currently waiting for the approval of student loan forgiveness. President Joe Biden announced that he intended to forgive up to $20,000 in student loan debt per borrower under an income threshold. Unfortunately, court battles have prevented the Department of Education’s ability to follow through on this plan. Following two lower court rulings last fall that suspended the loan cancellation program, the Supreme Court agreed to hear an appeal from the Biden administration. In the future the Supreme Court will hear arguments in two separate cases challenging the plan. A decision determining the fate of the program isn’t likely until summer.
Details of Bidens proposal are as follows:
- $10,000 in forgiveness for most borrowers and $20,000 in total forgiveness for borrowers who received a Pell Grant while in school
- Only borrowers who earn less than $125,000 per year or $250,000 for couples qualify for debt relief
- Only applies to loans secured before June 30, 2022
Approximately 43 million borrowers are expected to be eligible for debt forgiveness under this plan. But the future of Biden’s plan now depends on the U.S. Supreme Court.
Here Is A Timeline Of What Has Happened So Far:
August 2022 – President Joe Biden revealed his plan for student loan forgiveness on August 24 2022.
September 2022 – The first lawsuit filed was from the California-based nonprofit Pacific Legal Foundation (PLF) on September 27th. That case argued that a borrower would be harmed by automatic debt forgiveness if they live in a state that planned to tax canceled debt. After it was clarified that borrowers could opt out of debt relief, a court threw out that suit. The second and more substantial suit came on September 29th. This case involves six Republican-led states that will soon appear before the U.S. Supreme Court. The six states are: Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina. On September 29th, the option for Federal Family Education Loans (FFEL) program borrowers to gain forgiveness was brought to an end. At one point all they had to do was consolidate their loans into the Direct Loan program and they’d be eligible for forgiveness.All borrowers who consolidated before September 29 could still have debt erased. But those who did it on that date or after would no longer be eligible.
October 2022 – October 14th marked the first day that federal student loan borrowers could apply for debt relief. The form asked for basic information and also asked that applicants confirm that they fall within the income threshold of $125,000 per year, or $250,000 for couples.
October and November 2022 – On October 20th, Judge Henry Edward Autrey of the Eastern District of Missouri denied the motion for a preliminary injunction for the case brought by six Republican-led states. Autrey said the states could not prove ongoing injury and did not have grounds to sue. The states quickly appealed the decision, and the next day, the 8th U.S. Circuit Court of Appeals granted a stay in the case. This acted as a temporary block to the department’s ability to carry out loan discharges. A short time later, on November 10, Judge Mark Pittman of the U.S. District Court for the Northern District of Texas vacated the president’s plan. His decision involved a separate case brought by the Job Creators Network Foundation (JCNF). Pittman’s decision was based on the idea that President Biden did not have the authority to institute his plan to begin with.
November 2022 — The previous pause on federal student loan payments was set to expire on January 1, 2023. Because of pending court cases, Biden extended the date until July 1st. He said at the time that the extension would give the U.S. Supreme Court time to take up the case on appeal. On November 21st the 8th US Circuit Court of Appeals ruled that the lawsuit involving six Republican-led states had legal standing. The court issued a preliminary injunction, blocking the president’s forgiveness plan.
November 2022 – On November 11th the Federal Student Aid (FSA) port stopped accepting applications for student loan debt cancellation.
December 2022 – On December 1st the Supreme Court announced that it would take on multiple cases that aim to prevent Biden’s debt forgiveness plan. The Supreme Court of the United States combined two cases and plans to hold a hearing on both on Feb. 28, 2023. The first case involves six Republican-led states claiming debt relief will decrease revenue. The other case alleges borrowers were denied the right to protect their economic interests because the department did not go through a formal rule making process.
February 2023 — On February 28 2023 attorneys representing six Republican-led states hoping to block debt cancellation argued that the federal government does not have the power to cancel hundreds of millions worth of debt. Unfortunately for borrowers trying to plan ahead, the Supreme Court will most likely not make a decision until the end of its current term, typically at the end of June or early July.
While student loan debtors wait for a decision to be made, what happens with those student loan debtors who owe private student loans? There is nothing being said about private student loans being forgiven, so one must come up with a solution on their own. Luckily, CuraDebt, a debt settlement firm is here to help you with your debts. Call us today to find out how we can help you resolve your private student loan debt. 1-877-850-3328