Federal judge rules Biden’s student loan forgiveness plan illegal

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Diving Brief:

  • A Texas federal judge late on Thursday declared President Joe Biden’s plan to write off large swathes of student debt illegal, giving a victory to conservatives who deemed it overkill by the government and financially reckless.
  • U.S. District Judge Mark Pittman, appointed by former President Donald Trump, wrote in his decision the Biden administration has illegally veered into political territory that should be reserved for Congress. His order cancels the nationwide loan forgiveness program, effective immediately.
  • The US Department of Education did not immediately comment on Thursday. However, he will likely appeal, as officials have pledged to fight legal maneuvers to block the program.

Overview of the dive:

Conservatives filed legal challenges against Biden’s student loan forgiveness program shortly after announcing it in August.

A common thread among the lawsuits is accusations that the Department of Education overstepped its decision to write off federal student loan debt. The program would forgive up to $10,000 to individual borrowers earning up to $125,000 a year and up to $20,000 to those who received federal Pell grants while in college. Pell Grants serve as a proxy for low and moderate income status.

Few of these lawsuits have been successful. Even a Trump appointee to the U.S. Supreme Court, Amy Coney Barrett, has refused to intervene in cases seeking to bring down the plan.

However, in recent weeks, the program has seemed more under threat. A federal judge at the end of October temporarily suspended the plan in a lawsuit brought by six Republican-led states.

The Department of Education was still accepting requests for debt relief and recently said it was prepare to deliver to a first round of 16 million borrowers.

Pittman ruled in a lawsuit brought by two college graduates, Alexander Taylor and Myra Brown, who alleged the administration arbitrarily decided who was eligible for debt forgiveness. They were supported by the Job Creators Network Foundation, an organization determined to fight what he sees as bad government policy.

Taylor, who funded his University of Dallas undergraduate degree with student loans, objected to not being eligible for the additional relief given to Pell Scholarship recipients.

Brown has also taken out loans, but through the defunct Federal Family Education Loan, or FFEL, program which makes them private.

The White House initially said borrowers could consolidate FFEL loans into direct loans, thereby qualifying for debt relief. But the Department of Education backed out of the policy in September, which legal experts said was likely to avoid prosecution.

The Biden administration justified its power to write off debt broadly with a 2003 law known as the Higher Education Student Aid Opportunity Act, or HEROES.

This act allows the Secretary of Education to make changes to federal financial aid during war or other national emergencies. The administration said the coronavirus pandemic qualifies as such an emergency

Pittman disagreed that the HEROES Act gave that power to the secretary.

“The Court is not blind to the current political division in our country,” he wrote. “But it is fundamental to the survival of our Republic that the separation of powers as set out in our Constitution be preserved.”

Critics lambasted Pittman’s decision.

The Student Borrower Protection Center, an advocacy group, in a statement called Pitman a “right-wing federal judge” who has followed conservative politicians.

The group called on Biden to continue freezing student loan payments, which have not been needed since the early days of the pandemic. This moratorium is due to expire at the end of the year.

“The Biden administration needs to use this decision as an opportunity to make it clear that the student loan system will remain closed as long as these partisan legal challenges persist,” said Mike Pierce, the group’s executive director. “Student borrowers should never be sacrificed as pawns in Republican political games.”

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