Judge extends federal student loan forgiveness block
The block on President Joe Biden’s student loan forgiveness plan was extended on Monday as the courts evaluate its legality.
The St. Louis-based 8th U.S. Circuit Court of Appeals issued an injunction preventing the Department of Education from eliminating student loan debt based on Biden's executive order in August.
The move is part of a lawsuit issued by Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. These six states argue that Biden’s student debt relief plan threatens future tax revenues. Previously, a federal judge had dismissed these arguments, but the states appealed the decision.
And this isn't the only legal battle that Biden’s student debt forgiveness plan is facing. In a separate ruling Thursday, a federal judge in Texas ruled that the plan was "unlawful" in a suit led by two borrowers who were either partially or fully ineligible for debt forgiveness.
If you hold private student loans, you likely won’t qualify for any kind of federal student debt relief. However, you can refinance your private student loans to lower your interest rate and monthly payments. Visit Credible to compare different student loan lenders, without affecting your credit score.
TEXAS FEDERAL JUDGE BLOCKS BIDEN'S STUDENT LOAN FORGIVENESS
Who qualifies for Biden's student loan forgiveness?
While the student loan forgiveness plan is currently blocked, the Biden administration continues to fight this ruling in court.
The plan applies to eligible federal student loans backed by the Department of Education and calls for the cancellation of up to $10,000 in student debt per borrower or up to $20,000 in student loans for Pell Grant recipients. To qualify, borrowers can’t make more than $125,000 per year if filing single or $250,000 for married couples.
"The skyrocketing cumulative federal student loan debt – $1.6 trillion and rising for more than 45 million borrowers – is a significant burden on America’s middle class," the White House said in a statement. "Middle-class borrowers struggle with high monthly payments and ballooning balances that make it harder for them to build wealth, like buying homes, putting away money for retirement, and starting small businesses."
If you're struggling to make student loan payments, you can consider refinancing your private student loans to lower your interest rate and your monthly payments. Visit Credible to compare interest rates to find one that works for you.
BIDEN CANCELS $10K IN STUDENT LOAN DEBT PER BORROWER — WHAT TO KNOW
Can you still apply for student loan forgiveness?
Federal student loan borrowers could previously apply for student loan forgiveness online. However, the Department of Education stopped taking applications after the Texas judge ruled that the plan was an "unconstitutional exercise of Congress’s legislative power."
A message on the Federal Student Aid website says that "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."
However, the department said it would hold on to applications that were already submitted.
If you have private student loans, you won’t qualify for federal student debt forgiveness. But you can potentially lower your interest rate and monthly payments by refinancing your private loans. Visit Credible to speak with a student loan expert and see if this option is right for you.
MANY BORROWERS TOOK OUT STUDENT LOANS ANTICIPATING DEBT FORGIVENESS, SURVEY SAYS
The future of student debt relief
As Biden’s student debt relief plan faces legal challenges, advocates have called for an extension of the payment freeze.
At the height of the COVID-19 pandemic, a section of the CARES Act froze payments for certain federal student loans and reduced interest rates to 0%. After several extensions, the payment pause is set to expire on Dec. 31.
But some advocates have called for another extension as the courts evaluate student loan forgiveness.
"We call on President Biden to protect borrowers during this uncertain time, by extending the student loan payment pause until all legal hurdles are cleared and debts are canceled," the Student Debt Crisis Center (SDCC) said in a statement.
If you have private student loans, you may not qualify for debt forgiveness. But you can refinance your student loans in order to lower your interest rate. Visit Credible to speak to a student loan refinancing professional to see if this option is right for you.
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