Biden will extend freeze on student loan payments: White House puts fees on hold as it battles to save its $500 billion forgiveness program in lawsuits saying it as an abuse of power

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  • Payments were set to resume on January 1, although a legal back-and-forth left borrowers unsure whether they were required to repay the loan.
  • The White House will now extend the date for either 60 days after court-ordered approval is granted for the plan to proceed, or 60 days after June 30.
  • Earlier this week the Biden administration asked the Supreme Court to weigh and remove a ‘false injunction’ against their plan
  • Federal borrowers will now have a three-year break from repaying their loans since the moratorium was first implemented in March 2020

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President Biden plans to extend the moratorium on student loan payments to a maximum of eight months, taking into account the interest accrued on the loans until the legal battle is over.

Amid legal back-and-forth over the Biden administration’s plan, federal borrowers have been left in limbo as to whether their loans of up to $20,000 will be wiped out. Payments were set to resume on January 1, but the White House will now push that date forward either 60 days after the plan is ordered by a court to proceed or 60 days after June 30. days after the litigation has not been resolved. ,

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Federal borrowers will now have a three-year break from repaying their loans since the moratorium was first implemented in March 2020.

“The courts’ drastic efforts to block student loan relief have created tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan their vacations without a clear picture of their student loan obligations.” can’t even plan for, and that’s absolutely wrong,” said Education Secretary Miguel Cardona in a statement.

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“We are extending the moratorium because it would be very unfair to ask borrowers to pay debts that they would not have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests. ‘

Earlier this week, the Biden administration asked the Supreme Court to weigh and remove a “wrongful injunction” against their plan.

A US appeals court has blocked President Joe Biden’s plan to cancel hundreds of billions of dollars in student loan debt at the urging of six Republican-led states, a court filing said Monday.

The 8th US Circuit Court of Appeals in St. Louis issued a nationwide injunction temporarily barring the Biden administration from wiping out hundreds of billions of dollars in federal student loans, citing “irreversible impact.”

The three-judge panel said the injunction would remain in effect “until further orders of this court or the Supreme Court” pending an appeal of a lower court decision allowing the student loan program to proceed.

The Education Department has now stopped taking new applications for relief. The department said it will hold applications from more than 26 million borrowers who have already applied for forgiveness.

House Education and Labor Committee Republicans participated in the expansion.

‘This policy costs taxpayers billions every month it continues. Return on repayment is long overdue,’ he wrote on Twitter.

Other Republicans attacked the expansion while Democrats celebrated it.

‘Biden administration freezes student loan repayments again. Reckless moves like this are part of the reason the #Bidenflation is so bad,’ Rep. Lisa McClain, R-Mich., wrote on Twitter.

A lower court dismissed the case by Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina on October 21, arguing that they had no basis to sue.

For those who want to put forward a legal take on the Biden administration’s plan, the main hurdle has been finding a plaintiff they can prove harmed by the policy.

An appeals court determined Monday that Missouri had the legal standing to bring up the matter because the Missouri Higher Education Loan Authority, or MOHELA, a major loan servicer headquartered in the state, would lose revenue under the plan.

‘And since at least one party is likely to stand, we need not address the stand of the other states,’ the panel concluded.

Biden’s plan would cancel up to $20,000 in federal student loans for Pell Grant recipients and up to $10,000 for other student borrowers up to $125,000.

The average student loan balance currently exceeds $30,000.

In September the nonpartisan Congressional Budget Office calculated that loan forgiveness would eliminate $430 billion of the $1.6 trillion in outstanding student loans and benefit about 40 million people.

The plan has attracted several legal challenges, most of which have been unsuccessful. The Supreme Court rejected a request from a group of Wisconsin taxpayers to block the policy multiple times.

In September, the nonpartisan Congressional Budget Office said the plan is expected to cost $400 billion over the next 30 years.  Student loan debt has reached $1.73 trillion

In September, the nonpartisan Congressional Budget Office said the plan is expected to cost $400 billion over the next 30 years. Student loan debt has reached $1.73 trillion

The Department of Education relied on a law known as the HEROES Act, where Congress gave the president the power to erase or freeze student loan debt during times of national emergency and cited COVID-19 as an emergency.

Republican-led states have said the program is out of executive reach because the post-9/11 HEROES Act was designated for emergencies such as a terrorist attack.

Education Section. Miguel Cardona said he wanted to process as many debt relief applications as he could before payments resumed in January.

A responsible federal budget committee expects the student loan plan to cost taxpayers about $500 billion.

Credit: www.dailymail.co.uk /

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