Education Department Suspends Federal Student Loan Forgiveness Applications

Following another court order blocking the federal student debt relief program, the United States Department of Education has suspended the program's online application.

The Job Creators Network's Court Case

On October 10, the Job Creators Network, a conservative advocacy organization, filed a lawsuit in Texas on behalf of Myra Brown and Alexander Taylor. The JCN argued the plaintiffs were unfairly excluded from the student debt relief program. Brown's loans are held by a commercial lender, instead of the Education Department, and are ineligible because they're not in default. Taylor, meanwhile, only qualifies for $10,000 in student debt relief—instead of the $20,000 maximum—because he was ineligible for a Pell Grant when he was in college based on the financial circumstances of his parents at the time.

On November 11, U.S. District Judge Mark Pittman ruled in favor of the plaintiff, holding that the HEROES Act doesn't provide “clear congressional authorization” for the student loan relief program and that the Biden Administration usurped Congress’ power to create laws. Pittman declared the program is unlawful and vacated it. Following this ruling, the Department of Justice filed a notice to appeal, which is awaiting review from the 5th Circuit Court of Appeals.

The following day, the U.S. Education Department updated the Federal Student Aid student loan forgiveness application webpage with a note stating, as a result of the court orders blocking the student debt relief program, the department is no longer accepting new applications at this time. Applications are being held for those who already applied.

Student Debt Relief Inundated by Legal Challenges

While Pittman's ruling preceded the student debt relief application's suspension, the program had already been blocked thanks to a prior court order. On October 21, a hold was placed on the student loan forgiveness program while the Court of Appeals for the Eighth Circuit considers the request for injunction pending appeal of the dismissal of a case brought by Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina. The Republican-led states argued their state-based loan servicers would be financially harmed should student loan borrowers consolidate old, privately-held federal loans in order to qualify for debt forgiveness.

These aren't the only court cases the Biden Administration's student loan forgiveness program has had to weather, as it's been facing opposition almost since it was announced. The White House has previously been able to counter legal arguments by making changes to the program itself; however, this new ruling challenges the entire argument underpinning the program (i.e., that the HEROES Act grants the Education Department the authority needed to implement mass debt cancellation). As things currently stand, it’s looking likely that both the lawsuit filed by the six states as well as the Texas case will eventually make their way to the Supreme Court.