Student-Loan Forgiveness Plan on Hold: How the Lawsuits Affect You
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Here's your Money Briefing for Tuesday, October 25th. I'm J.R. Whelan for The Wall Street Journal.
What legal actions have temporarily halted Biden’s student-loan forgiveness plan?
Millions of Americans have applied for student loan forgiveness, but a series of lawsuits filed against the government challenging the program has thrown into question when and if borrowers will see any of their debt wiped away.
So a federal judge on Friday put a temporary stay on this program, which means that for now, the Biden administration can't go ahead and cancel any debt.
Coming up, we'll check in with our reporter Gabriel Rubin to get an update on where the litigation stands, including what borrowers should do while the matter is tied up in court. Plus, what happens if you've already paid off your student loans? We'll tackle those questions and more after the break.
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Who sued the administration and what standing do the states claim in the lawsuit?
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President Biden's student loan forgiveness plan would benefit the majority of the 43 million people who currently hold about $1.6 trillion in debt. So where do you sign up? And what does several lawsuits filed against the program mean for your debt? Wall Street Journal reporter Gabriel Rubin has been following the student loan issue every step of the way, and he joins us from Washington. Gabe, thank you very much for being with us.
It's great to be with you.
So Gabe, first of all, there's been a lot of litigation surrounding this program. Where do things stand?
So a federal judge on Friday put a temporary stay on this program, which means that for now, the Biden administration can't go ahead and cancel any debt. The judge put that stay in place as a result of a lawsuit by six GOP-led states that are suing the administration for harms that they think will result from the mass debt cancellation program. One of the states that's suing, Missouri, has its own student loan processing agency, so they are alleging that with fewer borrowers having student loans, they'll have less work to do, which will have an impact on state revenues. Other states that are suing are claiming that there will be other harms to taxpayer-related revenue, making them have standing in this case and allowing them to sue the federal government.
Okay, now the forgiveness plan has won previous legal challenges.
Can borrowers still apply for loan forgiveness while the courts review the program?
So let's tackle some of the topics that people need to know who are thinking of applying. First of all, can people apply while the current legal challenge is being heard in court?
Yes, the administration has actually encouraged people to continue applying for debt relief, even while this is litigated in courts. And the administration says that around 22 million people have already applied for relief. Now, that number is a little inflated because 8 million of those people already had their data at the Department of Education. But nonetheless, 22 million people is around half or even over half of all student loan borrowers.
OK, now refresh us on a few things. Where do people apply and who's eligible to apply for loan forgiveness?
Borrowers can submit an application, which is very short.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:00–0:41
2
What legal actions have temporarily halted Biden’s student-loan forgiveness plan?
0:41–1:21
3
Who sued the administration and what standing do the states claim in the lawsuit?
1:21–3:14
4
Can borrowers still apply for loan forgiveness while the courts review the program?
3:14–4:09
5
Where do you apply, who is eligible, and what are the income limits for relief?
4:09–5:57
6
Are Parent PLUS loans and families eligible for combined relief under the plan?
5:57–7:54
7
Will forgiven student debt be taxed at the federal or state level?
7:54–8:27
Speakers
3 identifiedMore from WSJ Your Money Briefing
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