Biden’s attempt to resuscitate the student debt plan is rejected by the U.S. appeals court
Reuters, 30 November – On Wednesday, a federal appeals court declined to overturn a Texas judge’s decision that President Joe Biden’s proposal to forgive hundreds of billions of dollars in student loan debt was illegal.
In a case brought by a conservative advocacy group, the 5th U.S. Circuit Court of Appeals in New Orleans denied the Biden administration’s plea to stay a judge’s ruling invalidating the $400 billion student debt relief scheme on November 10.
The ruling by U.S. District Judge Mark Pittman in Fort Worth, Texas, was one of two made nationally that barred the Democratic president’s U.S. Department of Education from offering debt relief to millions of debtors.
The administration has urged the U.S. Supreme Court to reverse a decision by the 8th U.S. Circuit Court of Appeals in St. Louis that had prohibited it from cancelling student loans at the request of six Republican-led states.
In a brief order issued on Wednesday, a three-judge panel of the 5th Circuit decided to stay Pittman’s decision while the administration challenged it. However, the court ordered that the appeal be considered quickly.
In a brief order issued on Wednesday, a three-judge panel of the 5th Circuit decided to stay Pittman’s decision while the administration challenged it. However, the court ordered that the appeal be considered quickly.
According to a policy announced by Biden in August, borrowers who earn less than $125,000 a year, or $250,000 for married couples, will have up to $10,000 in student loan debt forgiven by the federal government. Up to $20,000 of student debt will be forgiven for those who earned Pell Grants, which were intended for college students from lower-income families.
Biden pledged during the 2020 presidential campaign to assist former college students who were burdened with debt. Republicans have opposed Biden’s plan, arguing that it will shift debt burdens from wealthy elites to lower-income Americans.
The cost of the debt forgiveness scheme, according to a September estimate by the Congressional Budget Office, would be $400 billion for the taxpayers.
By the time Pittman announced his decision, the U.S. Department of Education had already granted requests from 16 million of the approximately 26 million Americans who had sought for student loan forgiveness.
In order to reduce uncertainty for borrowers while the legal dispute over the debt relief scheme is resolved, Biden announced last week that his administration will prolong a suspension on student loan payments.
In a lawsuit brought by two borrowers who were either completely or partially ineligible for the loan forgiveness and who were supported by the Job Creators Network Foundation, a right-leaning advocacy organisation established by Bernie Marcus, a co-founder of Home Depot, Pittman had made a decision.
The scheme was “one of the biggest exercises of legislative power without congressional approval in American history,” the judge claimed, so whether Biden’s plan was wise policy was irrelevant.
Pittman said that the scheme was not authorised by the HEROES Act, which the Biden administration had used to pass the relief plan and which offers loan help to service people.
The 5th Circuit’s order on Wednesday prevented the administration from trying to “get money out the door to debtors and claim victory,” according to Elaine Parker, president of the Job Creators Network Foundation.
