What to know about the pause on student debt relief

(The Hill) – The legal challenges facing the Biden administration over its student loan forgiveness program is leaving borrowers in limbo as the White House is now forced to halt administering the program until the Supreme Court rules on the matter.

Spirits among advocates were high when the program was announced in August, when Biden promised $10,000 in federal loan forgiveness for those making less than $125,000 and $20,000 for those making that same amount who received Pell Grants.

While the administration recently notified certain borrowers who are eligible for forgiveness, it also indicated that it cannot execute the program while the Justice Department fights legal challenges in court, leaving borrowers confused over the status of their promised debt relief. The administration has also stopped accepting applications for the program as a result.

Here are five things you need to know about where student loan forgiveness stands.

Court cases hold up program

The Biden administration has faced at least six court challenges since announcing the student debt relief program, but only two so far have seen success in their efforts. 

A Texas-based, Trump-appointed federal judge earlier this month invalidated the program, saying Biden has overstepped his power in the executive branch and that it was up to Congress to make such laws.

“In this country, we are not ruled by an all-powerful executive with a pen and a phone. Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government,” the judge wrote. The administration has asked the 5th Circuit Court of Appeals to halt that ruling until it files an appeal in that case.

A second successful challenge came from six conservative-led states, Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina, in the St. Louis-based U.S. Court of Appeals for the 8th Circuit back in October. 

The states argued that they were harmed by the freeze in student loan payments. A three-judge panel unanimously decided the program should be paused until further notice from that court or the Supreme Court.

Biden administration fights back

The Biden administration has taken action against both of those cases, most recently asking the Supreme Court to intervene.

“We’re not going to back down though on our fight to give families breathing room,” Biden said on Tuesday when he announced another extension to the pause on federal student loan payments. “That’s why the Department of Justice is asking the Supreme Court of the United States to rule on the case.”

In the Texas case, the Justice Department submitted a legal filing to the New Orleans-based U.S. Court of Appeals for the 5th Circuit asking for it to pause the order from that judge.

The department’s filing to the 5th Circuit came only a day before it filed a petition to the Supreme Court, asking the high court to overturn the 8th Circuit’s decision so the Biden administration could administer its debt relief program.

“The [8th Circuit’s] injunction thus frustrates the government’s ability to respond to the harmful economic consequences of a devastating pandemic with the policies it has determined are necessary,” U.S. Solicitor General Elizabeth Prelogar told the justices.

Along with hurting the government’s program, the Justice Department argued the 8th Circuit’s ruling regarding the program leaves “vulnerable borrowers in untenable limbo.” 

White House press secretary Karine Jean-Pierre said this week that the administration is confident the program will hold, adding that all options are on the table when asked if the White House is putting contingency plans in place.

“We took it to the highest court of the land, as you know — the Supreme Court — because we wanted to get a clarification on this quickly. And so, we’re confident in that process,” she said on Monday.

Loan payment pause extended to next year

After pressure from activist groups, the Biden administration announced on Tuesday they would be extending the pause of student loan payments into next year. 

The pause, which was set to expire on Dec. 31, was extended up to June 30, with Biden saying the extension allows the Supreme Court time to hear the case in its current term. 

The payment pause will end “no later than June 30, 2023,” Biden said, because payments will resume 60 days after the Education Department is permitted to implement the program or the litigation is resolved, which should come before the end of June, when the Supreme Court term typically concludes.

The announcement comes after the administration fell under pressure from student loan advocacy groups, which argued borrowers should not have to pay monthly student loans bills until the courts reach a decision on the legality of student debt forgiveness.

The pause on student loan payments began at the beginning of the COVID-19 pandemic under former President Trump to give relief to struggling Americans. It has been extended under the Trump and Biden administrations at least six times.  

With the legal barricades that have popped up against the debt relief program, Biden said he is “never going to apologize for helping working class and middle class families.”

Forgiveness timeline unknown

Despite the payment pause deadline being extended to June, a firmer deadline on any court decisions remains unknown. 

Borrowers could be waiting anywhere from weeks to months before they know if Biden’s program will be executed and any actual debt be forgiven. 

In the meantime, the Biden administration has encouraged borrowers to sign up for updates from the Department of Education regarding the program so borrowers can know when any updates are available.

Robert Moran, a former senior policy adviser in the Education Department under President George W. Bush predicted the legal challenges could be resolved in the next few months.

“I do think the Supreme Court will resolve in February or March, which means folks will start repaying in April or May,” he said.

Carl Tobias, a law professor at the University of Richmond, predicted that it could take longer.

“Much currently remains unclear,” he said. “The justices could be waiting to weigh in for more than preliminary rulings and district court opinions before the high court seriously considers any appeal … if that happens, it may consume much time before the issue is resolved.”

Education Department is ready to provide relief

More than 23 million people applied for student loan relief before the legal limbo halted the program.

Although the Education Department has had to pull loan forgiveness applications off its website, it still has the information for the millions who moved to apply so far. 

Over the weekend, Education Secretary Miguel Cardona announced borrowers were getting updates on their applications despite the legal fight in which borrowers are being informed about whether their federal student loans would eventually qualify for debt forgiveness. 

“Your application is complete and approved, and we will discharge your approved debt if and when we prevail in court,” an email to an approved borrower says.  

Even if an application is approved, however, no debt relief can be applied to a borrower’s account until the legal challenges that have stopped the program from being administered are ruled upon.