The administration is being sued by six states.
QUICK FACTS:
- The student loan forgiveness program initiated by the Biden administration is being scaled back, as the administration is hit with a suit by six states.
- The states filed a lawsuit against President Joe Biden, claiming his student loan forgiveness plan is illegal.
- As of Thursday, student loan borrowers whose loans are held by private companies, not the U.S. Department of Education (DOE), no longer qualify for the program.
- Previously, students whose loans were held by private groups were able to consolidate their debt into a federal direct loan program and still qualify.
- However, the guidance now states that “As of Sept. 29, 2022, borrowers with federal student loans not held by ED cannot obtain one-time debt relief by consolidating those loans into Direct Loans.”
DOE’S STATEMENT:
- “Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve that goal while we continue to explore additional legally-available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans, including whether FFEL borrowers could receive one-time debt relief without needing to consolidate,” the Department of Education said in an emailed statement to journalists.
- “Borrowers with privately held federal student loans who applied to consolidate their loans into Direct Loans before September 29, 2022 will obtain one-time debt relief. The FFEL program is now defunct and only a small percentage of borrowers have FFEL loans. This is a completely different program than Direct Loans,” the statement went on to say.
BACKGROUND:
- Six Republican states recently launched a suit against President Joe Biden and his administration due to their plan to cancel hundreds of billions of dollars in student loan debt.
- Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina filed suit in the U.S. District Court in Missouri, saying that because Congress did not authorize the cancelation, Biden lacked the legal authority to act as he did last month when he announced the cancelation.
- The group cited the Supreme Court ruling in West Virginia vs. Environmental Protection Agency where the court ruled the executive branch cannot make a law that Congress has not legislated.
- “No statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed,” the states argued. “Just months ago, the Supreme Court warned federal agencies against “asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”
