The Biden administration is appealing the ruling. The case is now headed to the U.S. Court of Appeals for the 5th Circuit.

President Joe Biden speaks about a student loan debt relief plan in the Roosevelt Room of the White House in Washington on Wednesday, Aug. 24, 2022, as Education Secretary Miguel Cardona looks on. Al Drago/The New York Times

By Danielle Douglas-Gabriel, Washington Post

A federal judge in Texas has struck down President Biden’s student loan forgiveness program, tabling the administration’s plan to forgive up to $20,000 in federal loans held by tens of millions of borrowers.

The ruling Thursday from U.S. District Judge Mark T. Pittman of the Northern District of Texas handed a legal victory to the Job Creators Network Foundation, a conservative group that filed the lawsuit in October on behalf of two student loan borrowers.

The forgiveness plan was already on hold after an appellate court issued a stay in another lawsuit against the program. But Thursday’s ruling places Biden’s debt relief plan in further limbo just as more than half of the eligible 40 million borrowers have already signed up.

The Biden administration’s plan would cancel as much as $10,000 in federal student loan debt for people earning less than $125,000 a year, or less than $250,000 for married couples. Those who received Pell Grants, federal aid for lower-income students, could see up to $20,000 forgiven.

The court ruling and other legal challenges to Biden’s plan have sown uncertainty among borrowers. Here’s what we know.

Q: Why did the borrowers sue?

A: The plaintiffs allege the Biden administration made arbitrary decisions about the eligibility for and amount of forgiveness. They say the administration violated federal procedures by denying them and other borrowers a chance to comment before unveiling the program.

Alexander Taylor, one of the plaintiffs in the case, is eligible to have $35,000 in student loans reduced by $10,000, but because he never received a Pell Grant he does not qualify for the additional $10,000 provided to Pell recipients. Myra Brown, the other plaintiff, is ineligible for the plan because her federal loans, originated through the defunct Federal Family Education Loan (FFEL) program, are held by private entities. Some FFEL borrowers had consolidated their loans to qualify for the new forgiveness plan, but the Biden administration halted that possibility in late September.

Q: Is this decision final?

A: No, the Biden administration is appealing the ruling. The case is now headed to the U.S. Court of Appeals for the 5th Circuit.

The appeals court could vacate the district court ruling and return the case to the lower court, or rule in favor of the administration based on the merits of the appeal. After the court weighs in, it is possible either side could petition the Supreme Court to take up the case.

Q: I already applied for relief. What happens now?

A: After the 8th Circuit issued a stay last month, the Biden administration encouraged eligible borrowers to continue to apply for relief. It was not immediately clear whether the Education Department will continue accepting applications after Thursday’s ruling.

But White House press secretary Karine Jean-Pierre said, “For the 26 million borrowers who have already given the Department of Education the necessary information to be considered for debt relief – 16 million of whom have already been approved for relief – the Department will hold onto their information so it can quickly process their relief once we prevail in court.”

Q: When will loan payments resume?

A: Payments will resume in January, more than two years after President Donald Trump, citing the coronavirus pandemic, first implemented a freeze on federal loan payments. It was extended several times, including by Biden.

The Biden administration has encouraged borrowers to apply for debt relief by Nov. 15 in hopes of it being processed before a pause on student loan payments ends Dec. 31. That could give the Education Department enough time to recalculate borrowers’ monthly payments based on their new lower balances. However, the timeline for loans to be canceled remains uncertain amid the ongoing legal challenges to the program.

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