Biden's Student Debt Relief Struck Down In Court: What To Know In PA

PENNSYLVANIA — The federal student loan forgiveness program put forth by President Joe Biden's administration over the summer was struck down by a federal judge in Texas Thursday, further delaying relief for the Pennsylvanians among some 26 million borrowers across the nation.

The ruling came amid furor on the right over the plan and was in direct response to the conservative Job Creators Network Foundation's lawsuit, which argued the Biden administration did not allow proper time for public comment on the program. U.S. District Judge Mark T. Pittman, of the Northern District of Texas, agreed.

While the relief program is sure to linger in the courts for some time, the application process is temporarily paused. In Pennsylvania, about 1,717,300 people are eligible to apply, including 988,800 recipients of Pell Grants, a federal program for students who demonstrate greater financial need.

“If you've already applied, we'll hold your application,” the note said, adding that updates will be posted on the website when they’re available.

For Pell Grant borrowers, the program would forgive up to $20,000 in student loan debt. Other borrowers could see up to $10,000 of their debt canceled if they earn less than $125,000 ($250,000 for married couples) a year.

It still is yet to be determined Pennsylvania borrowers who expected to have their debt canceled will have to resume payments on Jan. 1, when the pause prompted by COVID-19 is set to expire. Economists worry that if the relief isn’t available, people who haven’t financially rebounded from the pandemic default on their loans.

While the plan has caused plenty of controversy among conservatives, what was hailed in many Democratic circles as a historic and landmark student loan debt relief package earlier in the summer actually turned out to not be as comprehensive as originally billed.

Without making an announcement, the Biden administration changed the language of its original proposal in late September. Some 4 million Americans with Perkins or Federal Family Education Loans (FFEL), loans which are privately held, will no longer qualify for forgiveness. The federal website on debt forgiveness was changed with the following note: "As of Sept. 29, 2022, borrowers with federal student loans not held by (the Department of Education) cannot obtain one-time debt relief by consolidating those loans into Direct Loans."

While it's not clear exactly how many Pennsylvanians are among those 4 million nationally, the package falls far short of getting many students out of the hole they're in, and cancelation-advocates say it's the crippling system that bankrupts students that needs more reform.

"If SoFI, a student loan refinancing company, could give its CEO a 92% raise last year paying him a grand total of $103 million in compensation and spend $625 million to put its name on the LA Rams football stadium, you know what President Biden can do?" U.S. Sen. Bernie Sanders said in the wake of the original bill. "Cancel all student debt."

The Justice Department filed an appeal to the Thursday ruling, White House Press Secretary Karine Jean-Pierre said Thursday.

“The President and this Administration are determined to help working, and middle-class Americans get back on their feet, while our opponents — backed by extreme Republican special interests — sued to block millions of Americans from getting much-needed relief,” Jean-Pierre said in a statement.

The program had been on hold since Oct. 21, when the U.S. 8th Circuit Court of Appeals granted an administrative stay, temporarily pausing the program while considering an injunction sought by six Republican-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — to block it.

“The Court is not blind to the current political division in our country," Pittman wrote in his ruling Thursday. "But it is fundamental to the survival of our Republic that the separation of powers as outlined in our Constitution be preserved.”

The Associated Press contributed reporting.