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Federal judge in Texas strikes down Biden’s student loan forgiveness plan

The Justice Department is appealing the decision, but the Education Department has halted relief applications

President Biden speaks about student debt relief at Delaware State University last week. (Anna Moneymaker/Getty Images)

A federal judge in Texas on Thursday struck down President Biden’s student loan forgiveness program, delivering a victory to a conservative advocacy group that sued to halt the plan.

The Job Creators Network Foundation filed a lawsuit in October on behalf of a borrower who does not qualify for the full $20,000 in debt relief and one who is ineligible altogether. The suit 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 unlawful in the Thursday order.

“In this country, we are not ruled by an all-powerful executive with a pen and a phone,” Pittman wrote in his order. “Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government.”

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Key details on Biden’s student loan forgiveness

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In a statement, White House press secretary Karine Jean-Pierre said: “We strongly disagree with the District Court’s ruling on our student debt relief program and the Department of Justice has filed an appeal. The President and this Administration are determined to help working and middle-class Americans get back on their feet, while our opponents — backed by extreme Republican special interests — sued to block millions of Americans from getting much-needed relief.”

More than 26 million people have applied for loan relief. Jean-Pierre said the administration will hold onto their information “so it can quickly process their relief once we prevail in court.” The Education Department, however, is no longer accepting applications in light of the ruling but encouraged borrowers to sign up for updates at studentaid.gov.

After six repayment extensions, pressure from Congress and activists, the White House acts on federal student loans. (Video: Michael Cadenhead/The Washington Post)

Pittman’s order comes after the U.S. Court of Appeals for the 8th Circuit last month granted a temporary stay against the loan forgiveness program in a separate lawsuit brought by six Republican-led states. The cases are among a growing number of legal challenges to stop Biden’s program. Some of those suits, including one filed in Indiana and another in Wisconsin, have been dismissed for lack of standing.

On Thursday, Elaine Parker, president of the Job Creators Network Foundation, praised the ruling and said it “protects the rule of law which requires all Americans to have their voices heard by their federal government.” The Job Creators Network was founded by Bernie Marcus, a GOP donor who co-founded Home Depot.

“This attempted illegal student loan bailout would have done nothing to address the root cause of unaffordable tuition: greedy and bloated colleges that raise tuition far more than inflation year after year while sitting on $700 billion in endowments,” Parker said in a statement. “We hope that the court’s decision today will lay the groundwork for real solutions to the student loan crisis.”

Conservative groups and Republican lawmakers have assailed Biden’s plan from the outset and lauded the court’s decision Thursday. Rep. Virginia Foxx (N.C.), the top Republican on the House Education Committee, said, “This administration continues to operate as if its own self-appointed authority in transferring billions of dollars in student loans is legitimate, but the rule of law says otherwise. This radical scheme must be eviscerated entirely, and Republicans will continue to support legal challenges to achieve that end.”

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

Alexander Taylor, one of the plaintiffs in the case, falls under the income threshold and is eligible to have $10,000 knocked off the $35,000 in student loans he holds for an undergraduate degree from the University of Dallas, according to the complaint. Yet because he never received a Pell Grant, a form of federal aid for low-income students, he does not qualify for the additional $10,000 provided to Pell recipients.

Myra Brown, the other plaintiff in the lawsuit, is ineligible for Biden’s plan because her federal loans, originated through the defunct Federal Family Education Loan (FFEL) program, are held by private entities. Until late September, commercial FFEL borrowers like Brown could consolidate their loans into a Direct Loan to become eligible for Biden’s plan. But the Education Department reversed the policy to head off legal challenges such as the one being brought by the six states.

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

In a court filing responding to the complaint, the Justice Department argues that the 2003 statute underpinning Biden’s plan doesn’t require notice and comment. That law, known as the Heroes Act, authorizes the secretary of education “to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies.”

Justice attorneys argue that the parameters of the program were informed by research that shows the risk of delinquency and default is acute among lower-income borrowers and Pell recipients. They said Brown and Taylor are not entitled to any amount of loan forgiveness and that their grievances do not amount to a concrete injury.

Pittman took issue with the use of the Heroes Act, saying “it does not provide clear congressional authorization for the program proposed by the Secretary.”

He added: “The Court is not blind to the current political division in our country. But it is fundamental to the survival of our Republic that the separation of powers as outlined in our Constitution be preserved.”

Student advocates were growing concerned about the outcome of the lawsuit after Pittman recently told the parties that he planned to rule on the merits of the case, instead of determining whether the borrowers had standing to even bring the lawsuit.

“It meant he never actually considered the standing arguments the government made, never bothered to establish a record based on actual facts, and instead issued a poorly reasoned ideological screed for an opinion,” Mike Pierce, executive director of the Student Borrowers Protection Center, an advocacy group, said Thursday.

Student loan forgiveness

The latest: President Biden’s student loan forgiveness plan is on ice after a Texas judge blocked the student debt relief plan. Previously, the Biden administration said its moving “full speed ahead" on the rollout of student loan relief. Here’s what to expect in the student loan forgiveness application.

Calculate your eligibility: We tackled everything you need to know about the debt relief plan. Use this calculator to see how much of your student loan debt can be forgiven. Some colleges are eliminating student loans from financial packages.

The opponents: Is student loan forgiveness on hold? A federal appeals court temporarily halted the student debt relief program. Six Republican-led states are also suing to overturn President Biden’s student loan forgiveness plan. An Indiana lawsuit was the first significant legal action seeking to invalidate Biden’s policy.

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