Student loans

Federal judge weighs efforts to end student loan forgiveness

ST. LOUIS (AP) — A federal judge in St. Louis weighs the fate of the The Biden administration’s plan to write off student loan debt for tens of millions of Americans following a court hearing on Wednesday.

It’s unclear when U.S. District Judge Henry Autrey will rule on the lawsuit filed by six Republican-led states who seeks an injunction to terminate the student loan cancellation plan. Whatever he decides, an appeal is likely.

Democratic President Joe Biden announced in August that his administration would forgive up to $20,000 in education debt for a large number of borrowers. The announcement immediately became a major political issue ahead of November’s midterm elections.

The proposal sparked a lawsuit filed in September by Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. Other lawsuits followed, including one filed on Monday by the Job Creators Network Foundation alleging that the administration violated federal procedures by failing to seek public input on the program.

In the states’ lawsuit, a court filing on behalf of the administration said the Department of Education had “broad authority to administer federal student financial assistance programs.” He said the Higher Education Student Aid Opportunities Act of 2003, or HEROES Act, allows the Secretary of Education to waive or vary the terms of federal student loans in times of war or national emergency.

“COVID-19 is such an emergency,” the filing reads.

The Congressional Budget Office said the program would cost about $400 billion over the next three decades. James Campbell, an attorney with the Nebraska Attorney General’s Office, told Autrey that the administration was acting outside of its powers in a way that would cost the states millions of dollars.

“What they’re trying to do is get around Congress, and they can’t do that,” Campbell said.

The plan would forgive $10,000 of student loan debt for those earning less than $125,000 or households with incomes below $250,000. Pell Grant recipients, who typically demonstrate greater financial need, will get an additional $10,000 in debt forgiveness.

The administration almost immediately faced threats of legal challenges to its plans. Conservative lawyers, Republican lawmakers and business-oriented groups have argued that Biden was overstepping his authority by taking such sweeping steps without congressional consent. They called it an unfair government giveaway to the relatively well off at the expense of taxpayers who did not pursue higher education.

Meanwhile, many Democratic lawmakers facing tough re-election contests have walked away from the student loan plan.

The HEROES Act is a post-September. 11, 2001, law intended to help the military. The Justice Department says the law allows Biden to reduce or forgive student loan debt in the event of a national emergency. Republicans argue the administration is misinterpreting the law because, in part, the pandemic is no longer considered a national emergency.

But U.S. Justice Department attorney Brian Netter said the fallout from the COVID-19 pandemic was still reverberating. He said defaults on student loans have skyrocketed over the past two and a half years.

“This (the HEROES Act) is a law about emergencies — about national emergencies,” Netter said.

Forgiveness applies to federal student loans used to attend undergraduate and graduate school, as well as Parent Plus loans. Current students are eligible if their loans were disbursed before July 1. Administration officials said applications for debt relief will be available in October.

The plan makes 43 million borrowers eligible for debt forgiveness, 20 million of whom could see their debt wiped out entirely, according to the administration.

Autrey has given no indication as to when it will rule on the injunction request.

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Binkley reported from Washington, DC