Where Does Student Loan Forgiveness Stand After Texas Judgment?

President Joe Biden’s plan to forgive millions of borrowers up to $20,000 apiece on federal student loans has been blocked by a second federal court, leaving millions of borrowers wondering if they will ever get debt forgiveness.

On Thursday, US District Judge Mark Pittman ruled that the program usurped the power of Congress to legislate. The administration immediately appealed.

Related: Biden awards up to $20,000 on student loans affecting millions of Floridians

That’s not the only challenge the plan faces. Last month, the 8th US Circuit Court of Appeals in St. Louis temporarily stayed forgiveness of credit while it considers a challenge by six Republican-led states.

The fate of the plan will likely ultimately end up in the Supreme Court, meaning a final decision is a long way off.

Here’s where things stand:

How the forgiveness plan works

The debt relief plan announced in August would eliminate $10,000 in student loan debt for those earning less than $125,000 or households earning less than $250,000. Pell Grant recipients, who typically have higher financial needs, would receive an additional $10,000 in debt relief.

College students qualify if their loans are paid off before July 1st. The plan would see 43 million borrowers eligible for some debt relief, with 20 million able to write off their debt entirely, the administration said.

The Congressional Budget Office has announced that the program will cost about $400 billion over the next three decades.

The White House said 26 million people have applied for debt relief and 16 million people have already had their debt relief approved.

The Texas case

Pittman — a representative of former President Donald Trump based in Fort Worth, Texas — made it clear that he felt Biden had exceeded his authority. He said that the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act, did not provide for approval for the loan forgiveness program.

The law allows the Secretary of Education to waive or change the terms of federal student loans in times of war or a national emergency. The government said the COVID-19 pandemic has created a national emergency.

But Pittman said such a massive program would require clear approval from Congress.

The plan faces many other legal challenges

In September, the Republican-led states of Nebraska, Iowa, Kansas, Missouri, Arkansas and South Carolina filed suits to stop the program, arguing that the pandemic no longer qualifies as a national emergency. Justice Department attorney Brian Netter disagreed, telling US District Judge Henry Autrey in October that student loan defaults had skyrocketed over the past 2 1/2 years.

Autrey ruled on October 20 that states lacked credit and allowed the forgiveness plan to proceed. But the 8th Circuit temporarily halted it the next day while it considers a permanent suspension. This decision is still pending.

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The White House encouraged borrowers to continue applying for relief and said the court order did not prevent applications or the consideration of applications.

The plan faced other legal challenges. In October, Supreme Court Justice Amy Coney Barrett dismissed an appeal by a Wisconsin taxpayer group. A federal judge previously dismissed the group’s lawsuit, finding they did not have the legal right or authority to bring the case.

The Texas ruling was a major blow to the plan

Pittman’s decision negates the underlying legal argument used to justify Biden’s plan. Previously, the White House was able to evade legal attacks in court cases by tweaking details of the program.

One lawsuit argued that automatic debt forgiveness would result in borrowers in states that impose a tax on forgiven debt paying higher taxes. The administration responded by allowing borrowers to opt out. Another lawsuit alleged that Biden’s plan would harm financial institutions that derive revenue from certain types of federal student loans. The White House responded by scrapping these loans from the plan.

However, the new ruling argues that the HEROES Act does not grant power for mass debt forgiveness. The law allows the Department of Education great flexibility in national emergencies, but the judge ruled that it was unclear whether debt relief was a necessary response to COVID-19, noting that Biden had recently declared the pandemic over.

Supreme Court bound?

The legal situation is complicated due to the numerous lawsuits. It is likely that the Texas case and the lawsuit filed by the six states will be challenged in the Supreme Court. Before it reaches that level, the 5th Circuit and 8th Circuit Courts of Appeal – both dominated by conservative judges – will decide each case separately.

The 8th Circuit case could soon end up in the Supreme Court as the six Republican-run states have asked the Circuit Court of Appeals to stay the program while the case rolls. If the Court of Appeals grants that request, the administration will likely ask the Supreme Court to intervene. States could also go to the High Court if their application is denied.

Likewise, the government has signaled that it will appeal the Texas verdict. If the US Fifth Circuit Court is asked to block Pittman’s sentence pending appeal, the losing side could turn to the Supreme Court.

In either case, the appeals courts would not make a final decision on the validity of the program, but rather on whether it can proceed while the challenges continue.

At the same time, emergency orders can signal how courts will ultimately decide a case. In January, the Supreme Court consolidated challenges to the government’s authority to impose vaccination or testing requirements on the country’s major employers. A few days after hearing the arguments, the court divided 6-3 to block the request, saying the challengers were likely to prevail in the end. A separate vaccination mandate for most healthcare workers was allowed when the court concluded a challenge was likely to fail.

General Search: ‘Will student loan waiver be cancelled?’

Borrowers are confused as to whether their debt will be forgiven or whether they will have to resume payments on Jan. 1 when a pause caused by the COVID-19 pandemic is due to expire.

After the Texas ruling, many took to the web and asked Google, “Is the student loan forgiveness going to be cancelled?” According to data from Google Trends, overall search traffic for “student loan forgiveness” quadrupled Thursday night and had increased nearly tenfold by Friday morning.

Some borrowers said they were skeptical they would ever see the relief anyway. Brenna Zimmerman, who graduated from Kansas State University in 2021 with about $30,000 in debt, called the debt relief “a little too good to be true.” And while the program would benefit her, Zimmerman, 24, now a graphics coordinator at a packaging company, wonders if it’s a good idea.

“I think I’d be an idiot if I didn’t apply,” she said, adding, “I don’t think it’s necessarily fair, especially to people who have decided not to go to school.”

Lauren Pete, a 20-year-old junior at Louisiana State University, has $10,000 in college debt and is hoping to go to grad school. She called the benefits of the loan forgiveness program “a dream come true” that would ease the financial burden on her and her parents, who didn’t go to college and worked hard to help her with tuition.

“All I want to do is make them proud and make this process a lot easier for them, especially since I have a younger brother who will start[college]next fall,” Pete said.

When 25-year-old Hofstra University graduate Sarah Puckett heard about the plan, she couldn’t believe that part of her $26,000 debt could be forgiven.

“I desperately called my dad and desperately said, ‘What does this mean?'” Puckett, now TV producer for True Crime Network, said. “Is that real? I have a feeling they’re going to take it away from us. I don’t believe it.”

Now she worries that it really was too good to be true.

“I’m so excited to have applied, but you know, I’m not going to take it to the bank until I see it actually happen,” Puckett said.

Frederick Bell, 30, of New Orleans, owes $23,000 on student loans and was hoping to be excused up to $3,000 of that amount. The 2014 University of Washington graduate said being debt-free would allow him to pursue his education or buy a home.

“This (Texas) decision definitely shattered a lot of people’s dreams when it came to financial freedom after this discharge,” Bell said.


By Jim Salter of Associated Press

AP journalists Mark Sherman and Collin Binkley in Washington; Gene Johnson in Seattle; Heather Hollingsworth in Mission, Kansas; Chrissie Thompson of Spokane, Wash.; Cheyanne Mumphrey in Phoenix; and Sara Cline of Baton Rouge, Louisiana, contributed to this report.