Biden Student Loan Forgiveness Update: Where Things Stand Currently

• President Biden last August proposed a highly anticipated plan to erase millions in student loan debt.
• Many conservatives opposed the plan, and several conservative-led groups and states began mounting legal challenges.
• Following two lower court rulings last fall that suspended the loan cancellation program, the Supreme Court agreed to hear an appeal from the Biden administration.
• On Feb. 28, the Supreme Court will hear oral arguments in two separate cases challenging the plan. A decision determining the fate of the program isn't likely until summer.

Millions of federal student loan borrowers continue to wait patiently — sometimes impatiently — for promised loan forgiveness.

The debt cancellation saga dates back to August, when President Joe Biden first announced that he intended to forgive up to $20,000 in student loan debt per borrower under an income threshold. However, court battles have inhibited the Department of Education's (ED) ability to follow through on this plan.

Here are the essential details of Biden's proposal:

• $10,000 in forgiveness for most borrowers and $20,000 in total forgiveness for borrowers who received a Pell Grant while in school
• Only borrowers who earn less than $125,000 per year — or $250,000 for couples — can qualify for debt relief
• Only applies to loans secured before June 30, 2022

Approximately 43 million borrowers are expected to be eligible for debt forgiveness under this plan.

The future of Biden's plan now depends on the U.S. Supreme Court.

To understand how we got to this point, here's a reverse timeline of events related to the student loan forgiveness plan:

March 2023 — Watchdog Says Forgiveness Plan Is Subject to Congressional Review

The Government Accountability Office (GAO) on March 17 declared that Biden’s plan to wipe federal student debt must be submitted to Congress.

It’s a step ED avoided up until this point.

In submitting the rule to Congress, any lawmaker can move to strike down the rule before it takes effect, and Republicans in both chambers quickly indicated they plan to do just that.

It's unlikely such moves by Republicans would make a difference because the president ultimately holds the power to veto any challenges from Congressional review; it's unlikely there are enough opponents of debt forgiveness to override a veto.

Still, the GAO action is significant as it may result in votes in each chamber that will force politicians to choose a side or abstain.

February 28, 2023 — Supreme Court Hears Oral Arguments in the Case

The Supreme Court heard arguments on Tuesday that will ultimately decide the future of President Joe Biden’s student loan forgiveness plan.

Attorneys representing six Republican-led states hoping to block debt cancellation argued that the federal government does not have the power to cancel hundreds of millions worth of debt.

U.S. Solicitor General Elizabeth Prelogar maintained that the Department of Education (ED) does have the authority to make this move under the Higher Education Relief Opportunities for Students (HEROES) Act originally passed in 2002.

That law allows the secretary of education to "waive or modify" student financial assistance programs for those who have "suffered direct economic hardship as a direct result of a war or other military operation or national emergency."

Oral arguments will also address a question that could block the court from even ruling on the merits of the case: Do the six states behind the challenge have the standing necessary to bring suit?

December 2022 — Supreme Court Agrees to Hear Case

The U.S. Supreme Court announced Dec. 1 that it would take on multiple cases that aim to prevent Biden's debt forgiveness plan.

SCOTUS combined two cases and plans to hold a hearing on both on Feb. 28, 2023. The first case involves six Republican-led states claiming debt relief will decrease revenue, while the other case alleges borrowers were denied the right to protect their economic interests because the department did not go through a formal rulemaking process.

Many believe the Supreme Court will expedite its process in the case. A decision will likely come through this summer.

November 2022 — Biden Extends Loan Payment Pause

The previous pause on federal student loan payments was set to expire on Jan. 1, 2023.

Because of pending court cases, Biden moved to extend the pause yet again to July 1. He said at the time that the extension would give the U.S. Supreme Court time to take up the case on appeal.

"I'm completely confident my plan is legal. But right now it's on hold because of these lawsuits," Biden said.

November 2022 — Appeals Court Blocks Forgiveness Program

Biden's legal mess truly hit a wall when the 8th U.S. Circuit Court of Appeals ruled Nov. 21 that the lawsuit involving six Republican-led states had legal standing. The court issued a preliminary injunction, blocking the president's forgiveness plan.

This comes after a lower court tossed the case.

According to court documents, Missouri's connection to the Higher Education Loan Authority of the State of Missouri (MOHELA) was integral in deciding whether the case had standing to proceed. MOHELA services federal loans, so Missouri is harmed by Biden's debt relief because it would decrease the volume of loans it services, the court stated.

November 2022 — Borrowers No Longer Able to Apply for Forgiveness

The Federal Student Aid (FSA) portal to apply for student loan debt cancellation stopped accepting applications on Nov. 11.

Recent court decisions played a role in the department's decision to remove the application from the FSA website.

"Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications," read a message on the website that previously housed the application.

October and November 2022 — Legal Cases Ping Pong Through Courts

The first domino to fall — besides the initial filings — in the legal case against Biden's debt relief plan came on Oct. 20. It was that day that Judge Henry Edward Autrey of the Eastern District of Missouri denied the motion for a preliminary injunction for the case brought by six Republican-led states.

In his decision, Autrey said the states could not prove ongoing injury and, therefore, had no grounds to sue ED.

The states quickly appealed the decision, and the next day, the 8th U.S. Circuit Court of Appeals granted a stay in the case. This acted as a temporary block to the department's ability to carry out loan discharges.

A short time later, on Nov. 10, Judge Mark Pittman of the U.S. District Court for the Northern District of Texas vacated the president's plan. His decision involved a separate case brought by the Job Creators Network Foundation (JCNF).

Pittman's decision was based on the idea that President Biden did not have the authority to institute his plan to begin with.

October 2022 — Application Goes Live

Oct. 14 marked the first day that federal student loan borrowers could apply for debt relief.

While live, the application asked for just six pieces of information:

• First name
• Last name
• Social Security number
• Date of birth
• Phone number
• Email address

The form also asked that applicants confirm that they fall within the income threshold of $125,000 per year, or $250,000 for couples.

September 2022 — Biden Backtracks on Forgiveness for FFEL Borrowers

For a time, ED set a path for Federal Family Education Loans (FFEL) program borrowers to gain forgiveness. All they had to do was consolidate their loans into the Direct Loan program and they'd be eligible for forgiveness, experts told BestColleges.

However, that ended on Sept. 29.

All borrowers who consolidated before Sept. 29 could still have debt erased. But those who did it on that date or after would no longer be eligible, according to ED.

September 2022 — Lawsuits Filed to Block Forgiveness

It took just over a month for lawsuits challenging Biden's plan to roll in.

The first was from the California-based nonprofit Pacific Legal Foundation (PLF) on Sept. 27. That case centered on the argument that a borrower would be harmed by automatic debt forgiveness if they live in a state that planned to tax canceled debt as income.

After ED clarified that borrowers could opt out of debt relief, a court threw out that suit.

The second and more substantial suit came on Sept. 29. This case involves six Republican-led states that will soon appear before the U.S. Supreme Court.

The six states are:

• Arkansas
• Iowa
• Kansas
• Missouri
• Nebraska
• South Carolina

The important part of this case involves MOHELA, which services federal student loans. The plaintiffs argue they will lose revenue due to the cancellation of large swatches of debt that they will no longer be able to charge interest on.

August 2022 — Forgiveness Plan Revealed

Biden unveiled his plan for student loan debt forgiveness on Aug. 24.

Rumors about a potential forgiveness program swirled around his administration for months before the announcement. But in the end, many advocacy groups praised the plan despite the long wait.

The extra $10,000 for Pell Grant recipients was a welcome surprise among many borrower advocates.

"Earning a college degree or certificate should give every person in America a leg up in securing a bright future," ED Secretary Miguel Cardona said the day of the announcement. "But for too many people, student loan debt has hindered their ability to achieve their dreams — including buying a home, starting a business, or providing for their family."