President Joe Biden’s executive order for student-loan forgiveness is facing serious legal challenges.
Key Details
- Student-loan forgiveness may be interrupted in its planned rollout by legal challenges.
- “Five separate lawsuits in courts across the country seek to block the plan, arguing that the president overstepped his executive power by authorizing such large-scale debt relief without congressional approval,” says Bloomberg.
- “If the application goes live this month, the Biden administration said some eligible borrowers who apply early enough could see a drop in their balance before loan payments resume next year,” Bloomberg adds.
- As we discussed last week, the order was scaled back to remove private loans from forgiveness following legal challenges from six states—which could further delay, reduce the scope of, or strike down the executive order.
Why it’s important
The current lawsuits face a massive threat to the law but it is unclear if or when the law could be struck down. Critics point to the president’s unlawful use of an executive order but the lawsuits will need to provide evidence of direct harm for a meaningful legal challenge.
If it is successful, the strike down could become a talking point in the midterm elections next month.
As we previously reported, President Biden announced an executive order in August providing up to $10,000 in debt cancellation for non-Pell Grant recipients and $20,000 in debt cancellation for Pell Grant recipients if their individual income is less than $125,000.
“Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina argue the program will harm local loan servicers who face loss of revenue. A judge is set to rule on the states’ request for a preliminary injunction by October 13,” says Bloomberg.
Twenty-two Republican governors signed a letter in September challenging the law.
While the order boosted the president’s poll numbers by as much as 10%, it has drawn constitutional, budgeting, and partisan concerns. Biden continues to defend the importance of reducing the outstanding $1.5 trillion in debt hampering the lower and middle classes.
Notable quote
“Biden’s student loan plan relies on a 2003 law that allows the Education Department to waive loan requirements to support borrowers in an emergency. Congress passed it to help borrowers serving in the military in the wake of the September 11 attacks. Biden declared the Covid-19 pandemic is such an emergency, even as deaths and infection rates fall significantly,” says Bloomberg.