- President Biden last August proposed a highly anticipated plan to erase millions in student loan debt.
- Many conservatives opposed the plan, often calling it unfair to those who already paid off their debt.
- The U.S. Supreme Court agreed to hear the case regarding the plan in late February.
Millions of federal student loan borrowers continue to wait patiently — sometimes impatiently — for promised loan forgiveness.
The debt cancellation saga dates back to August, when President Joe Biden first announced that he intended to forgive up to $20,000 in student loan debt per borrower under an income threshold. However, court battles have inhibited the Department of Education’s (ED) ability to follow through on this plan.
Here are the essential details of Biden’s proposal:
- $10,000 in forgiveness for most borrowers and $20,000 in total forgiveness for borrowers who received a Pell Grant while in school
- Only borrowers who earn less than $125,000 per year — or $250,000 for couples — can qualify for debt relief
- Only applies to loans secured before June 30, 2022
Approximately 43 million borrowers are expected to be eligible for debt forgiveness under this plan.
The future of Biden’s plan now depends on the U.S. Supreme Court.
To understand how we got to this point, here’s a reverse timeline of events related to the student loan forgiveness plan:
December 2022 — Supreme Court Agrees to Hear Case
The U.S. Supreme Court announced Dec. 1 that it would take on multiple cases that aim to prevent Biden’s debt forgiveness plan.
SCOTUS combined two cases and plans to hold a hearing on both on Feb. 28, 2023. The first case involves six Republican-led states claiming debt relief will decrease revenue, while the other case alleges borrowers were denied the right to protect their economic interests because the department did not go through a formal rulemaking process.
Many believe the Supreme Court will expedite its process in the case. A decision will likely come through this summer.
November 2022 — Biden Extends Loan Payment Pause
The previous pause on federal student loan payments was set to expire on Jan. 1, 2023.
Because of pending court cases, Biden moved to extend the pause yet again to July 1. He said at the time that the extension would give the U.S. Supreme Court time to take up the case on appeal.
“I’m completely confident my plan is legal. But right now it’s on hold because of these lawsuits,” Biden said.
November 2022 — Appeals Court Blocks Forgiveness Program
Biden’s legal mess truly hit a wall when the 8th U.S. Circuit Court of Appeals ruled Nov. 21 that the lawsuit involving six Republican-led states had legal standing. The court issued a preliminary injunction, blocking the president’s forgiveness plan.
This comes after a lower court tossed the case.
According to court documents, Missouri’s connection to the Higher Education Loan Authority of the State of Missouri (MOHELA) was integral in deciding whether the case had standing to proceed. MOHELA services federal loans, so Missouri is harmed by Biden’s debt relief because it would decrease the volume of loans it services, the court stated.
November 2022 — Borrowers No Longer Able to Apply for Forgiveness
The Federal Student Aid (FSA) portal to apply for student loan debt cancellation stopped accepting applications on Nov. 11.
Recent court decisions played a role in the department’s decision to remove the application from the FSA website.
“Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications,” read a message on the website that previously housed the application.
October and November 2022 — Legal Cases Ping Pong Through Courts
The first domino to fall — besides the initial filings — in the legal case against Biden’s debt relief plan came on Oct. 20. It was that day that Judge Henry Edward Autrey of the Eastern District of Missouri denied the motion for a preliminary injunction for the case brought by six Republican-led states.
In his decision, Autrey said the states could not prove ongoing injury and, therefore, had no grounds to sue ED.
The states quickly appealed the decision, and the next day, the 8th U.S. Circuit Court of Appeals granted a stay in the case. This acted as a temporary block to the department’s ability to carry out loan discharges.
A short time later, on Nov. 10, Judge Mark Pittman of the U.S. District Court for the Northern District of Texas vacated the president’s plan. His decision involved a separate case brought by the Job Creators Network Foundation (JCNF).
Pittman’s decision was based on the idea that President Biden did not have the authority to institute his plan to begin with.
October 2022 — Application Goes Live
Oct. 14 marked the first day that federal student loan borrowers could apply for debt relief.
While live, the application asked for just six pieces of information:
- First name
- Last name
- Social Security number
- Date of birth
- Phone number
- Email address
The form also asked that applicants confirm that they fall within the income threshold of $125,000 per year, or $250,000 for couples.
September 2022 — Biden Backtracks on Forgiveness for FFEL Borrowers
For a time, ED set a path for Federal Family Education Loans (FFEL) program borrowers to gain forgiveness. All they had to do was consolidate their loans into the Direct Loan program and they’d be eligible for forgiveness, experts told BestColleges.
However, that ended on Sept. 29.
All borrowers who consolidated before Sept. 29 could still have debt erased. But those who did it on that date or after would no longer be eligible, according to ED.
September 2022 — Lawsuits Filed to Block Forgiveness
It took just over a month for lawsuits challenging Biden’s plan to roll in.
The first was from the California-based nonprofit Pacific Legal Foundation (PLF) on Sept. 27. That case centered on the argument that a borrower would be harmed by automatic debt forgiveness if they live in a state that planned to tax canceled debt as income.
After ED clarified that borrowers could opt out of debt relief, a court threw out that suit.
The second and more substantial suit came on Sept. 29. This case involves six Republican-led states that will soon appear before the U.S. Supreme Court.
The six states are:
- South Carolina
The important part of this case involves MOHELA, which services federal student loans. The plaintiffs argue they will lose revenue due to the cancellation of large swatches of debt that they will no longer be able to charge interest on.
August 2022 — Forgiveness Plan Revealed
Biden unveiled his plan for student loan debt forgiveness on Aug. 24.
Rumors about a potential forgiveness program swirled around his administration for months before the announcement. But in the end, many advocacy groups praised the plan despite the long wait.
The extra $10,000 for Pell Grant recipients was a welcome surprise among many borrower advocates.
“Earning a college degree or certificate should give every person in America a leg up in securing a bright future,” ED Secretary Miguel Cardona said the day of the announcement. “But for too many people, student loan debt has hindered their ability to achieve their dreams — including buying a home, starting a business, or providing for their family.”