Texas federal judge blocks Biden's student loan forgiveness
Biden’s student loan forgiveness program faces biggest challenge yet, but here’s how you can save while paying down your student loans
Student loan forgiveness has been blocked by a Texas judge. (iStock)
A federal judge in Texas blocked President Joe Biden’s student loan forgiveness program Thursday, halting the administration's efforts to distribute the debt forgiveness.
U.S. District Judge Mark Pittman called Biden’s program an "unconstitutional exercise of Congress’s legislative power and must be vacated."
However, the Biden administration moved to challenge the ruling and filed an appeal Thursday evening.
"We are disappointed in the decision of the Texas court to block loan relief moving forward," Secretary of Education Miguel Cardona said in a statement. "Amidst efforts to block our debt relief program, we are not standing down. The Department of Justice has appealed today’s decision on our behalf, and we will continue to keep borrowers informed about our efforts to deliver targeted relief."
Biden’s program calls for one-time student loan forgiveness of up to $10,000 in eligible federal student loans or up to $20,000 for those who used Pell Grant loans in college. To qualify, federal student loan borrowers must make less than $125,000 per year or $250,000 for married couples.
But regardless of where student loan forgiveness goes from here, borrowers with private student loans generally won’t qualify for any kind of federal student relief. If you have private student loans and are seeking to lower your monthly payment, you could consider taking out a loan refinance to reduce your interest rate. Visit Credible to compare different student loan lenders, without affecting your credit score.
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Biden’s student loan relief program: What we know
Pittmans’ strike down of Biden’s student loan relief program marks the latest battle in the administration's effort to bring student loan forgiveness to millions. In October, the U.S. Court of Appeals for the 8th Circuit gave an emergency order to temporarily block the Biden administration’s student loan cancelation plan. The states of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina challenged Biden’s proposal, arguing that student loan relief would unfairly burden their states.
But the Texas judge's decision permanently bans the Education Department from carrying out the entire program.
As legal proceedings continue, federal student loan borrowers are undergoing the tail end of a payment pause. Under the CARES Act initiated at the height of the COVID-19 pandemic, these borrowers had their loan payments paused and interest rates dropped to 0%. That program is set to expire on Dec. 31, 2022.
If you hold private student loans, they do not qualify for the federal student loan payment pause. But you can lower your monthly payments by refinancing. Visit Credible to compare multiple student loan lenders at once and find the interest rate that's best for you.
BIDEN ADMINISTRATION REVISES STUDENT LOAN FORGIVENESS FOR SOME BORROWERS
Application for student loan relief is temporarily down
When six states launched a legal battle against Biden’s student loan forgiveness program, the administration still urged borrowers to apply for student loan forgiveness to see if they are eligible.
That may now be an issue. As of Friday, the Department isn’t taking any more applications. On its official website, it states, "Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders."
If Biden’s student loan forgiveness plan goes into effect, private student loan borrowers won’t benefit. If you have private student loans, you can potentially reduce your monthly student loan payment by refinancing to a lower interest rate. Visit Credible to find your personalized interest rate in minutes.
GOOD NEWS: PRIVATE STUDENT LOAN INTEREST RATES PLUNGE FOR 5- AND 10-YEAR LOANS
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