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Republican Efforts to Challenge Biden’s Student Loan Forgiveness Could Affect Borrowers

President Biden announced an unprecedented student loan forgiveness plan last month that will wipe out up to $20,000 in federal student loan debt for borrowers. The Education Department estimates up to 20 million borrowers could become debt-free through the initiative.

The Biden administration is rapidly trying to roll out the program, and a formal application should be released by early October. Education Department officials expect a four-to-six-week turnaround time for submitted applications, which will be processed on a rolling basis. Borrowers will have until April 30, 2024, to apply for relief.

But Republican lawmakers have expressed strong opposition to Biden’s student loan forgiveness plan and are actively seeking ways to potentially block its implementation through litigation in federal court. Here’s what this may mean for borrowers.

Biden’s student loan forgiveness plan

Under Biden’s plan, borrowers can be eligible for either $10,000 in student loan forgiveness if they did not receive a Pell Grant as part of their education. If they received a Pell Grant, they could get up to $20,000 in student loan forgiveness. A Pell Grant is a need-based grant (not a loan) awarded to low-income families.

To qualify for the relief, borrowers must have earned less than $125,000 in income (or $250,000 in combined income if married) in either 2020 or 2021.

Related: Income Limits on Biden Student Loan Forgiveness Plan

The Biden administration appears to have relied on the HEROES Act of 2003 to implement the student loan forgiveness plan. This legislation gives the executive branch broad authority to modify federal financial aid and student loan programs (including suspending or canceling debt) during a national emergency, such as a pandemic.

Republicans oppose Biden’s student loan forgiveness plan

Republican lawmakers expressed immediate opposition to Biden’s student loan forgiveness plan.

“This is a slap in the face to those who never went to college, as well as borrowers who upheld their responsibility to taxpayers and paid back their loans,” said Rep. Virginia Foxx (R-NC) in a statement last month. Foxx is the Republican leader on the House Education and Labor Committee.

“It’s a signal to every freshman stepping foot on campus to borrow as much as they can because taxpayers are picking up the tab.”

Earlier this week, a coalition of Republican state governors sent a letter to Biden, urging him to reverse his position and not proceed in enacting broad student loan forgiveness.

“At a time when inflation is sky high due to your unprecedented tax-and-spend agenda, your plan will encourage more student borrowing, incentivize higher tuition rates, and drive-up inflation even further, negatively impacting every American,” wrote the coalition.

“As president, you lack the authority to wield unilateral action to usher in a sweeping student loan cancellation plan.”

The letter cited “bipartisan opposition” to the plan, although recent polls suggest that Biden’s student loan forgiveness initiative enjoys broad public support.

Republican lawmakers, attorneys general, and right-leaning think tanks are actively looking to challenge Biden’s student loan forgiveness plan in court, arguing that he exceeded his authority in authorizing the initiative. Republican legal scholars and experts are researching potential legal challenges, according to The Washington Post.

One of the potential hurdles of litigating the issue is finding a plaintiff with legal “standing” to bring a challenge. To have standing, a plaintiff must show a valid legal basis for suing in federal court. The plaintiff would likely have to demonstrate to the court how Biden’s policy resulted in cognizable harm or injury. Republicans have acknowledged that this could be a problem.

Advocates for student loan borrowers are confident in the legal authority that underpins President Biden’s actions, arguing that the language in the HEROES Act of 2003 is clear and broad. Advocates also maintain that finding a plaintiff with sufficient standing to challenge the plan in federal court successfully will prove difficult.

Still, recent Supreme Court decisions indicate that the new conservative majority may be eager to reign in what it views as excessive executive agency authority. Every case is different, but if the Supreme Court winds up weighing in, there could be problems for borrowers.

Even if the case does not reach the Supreme Court, a lower federal court could impose an injunction on the implementation of the initiative, halting or delaying the Education Department’s efforts to roll out the student loan forgiveness benefits while the legal process plays out.

Depending on when such an injunction occurs, it could result in borrowers facing a seemingly indefinite delay. Or, if an injunction is announced after the administration has already begun implementing the initiative, there could be two classes of student loan borrowers – those who received student loan forgiveness before the injunction, and those who are stuck in limbo while the litigation moves forward.

Either way, a lawsuit challenging Biden’s legal authority to implement student loan forgiveness could cause confusion or disruption for millions of borrowers, leading some to delay submitting their applications or not pursuing the relief at all.

What student loan borrowers should do

For now, no legal challenge to Biden’s student loan forgiveness plan has been formally filed, and the Education Department is moving forward with the implementation of the initiative.

Related: Student Loan Forgiveness Calculator with New Biden IDR Plan

Borrowers should be on the lookout for an application that will be made available on StudentAid.gov in early October. The Education Department advises that borrowers apply as soon as possible, ideally before November 15, so that the loan forgiveness is in place before the end of the national student loan payment pause August 30, 2023, unless the courts rule on lawsuits sooner than that. Borrowers can sign up for updates here.

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