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The Biden administration could start discharging millions of Americans’ student debt as soon as Sunday. This is possible as some of the legal challenges brought against the sweeping policy by critics have failed in courts.
A taxpayers group in Wisconsin earlier this week requested that the U.S. Supreme Court immediately block Biden’s plan to cancel up to $20,000 in federal student debt for borrowers, but the court rejected the request.
Meanwhile, a federal district court in Missouri on Thursday tossed out the lawsuit brought by six Republican-led states, which accused the president of overstepping his power. Judge Henry E. Autrey of the Federal District Court in St. Louis said the states did not have sufficient standing to sue.
The main obstacle for those hoping to foil the president’s action has been finding a plaintiff who can prove they’ve been harmed by the policy, experts say.
“Such injury is needed to establish what courts call ‘standing,'” said Laurence Tribe, a Harvard law professor. “No individual or business or state is demonstrably injured the way private lenders would have been if, for instance, their loans to students had been canceled.”
Although there are a number of other legal challenges to the president’s plan outstanding, the Biden administration is moving forward with its program to cancel student debt.
“We feel these lawsuits are baseless, and we’re going to continue fighting for the American people,” Secretary of Education Miguel Cardona said Friday on CNN.
The U.S. Department of Education opened its application for student loan forgiveness in a beta test last Friday, and more than 8 million people submitted requests for relief over the weekend. The application officially launched Monday, and it’s been reported that millions more have applied since.
The president announced in August that most federal student loan borrowers will be eligible for some forgiveness: up to $10,000 if they didn’t receive a Pell Grant, which is a type of aid available to low-income undergraduate students, and up to $20,000 if they did.
More than 40 million Americans are in debt for their education, owing a cumulative $1.7 trillion, a balance that far exceeds outstanding credit card or auto debt.
Skyrocketing higher education costs coupled with stagnant wages have caused the amount of student debt people graduate with to soar. Today the average balance is more than $30,000, up from $12,000 in 1980.
Even before the pandemic, when the U.S. economy was enjoying one of its healthiest periods in history, problems plagued the federal student loan system.
Only about half of borrowers were in repayment in 2019, according to an estimate by higher education expert Mark Kantrowitz.
About 25% — or more than 10 million people — were in delinquency or default, and the rest had applied for temporary relief for struggling borrowers, including deferments or forbearances.
These grim figures led to comparisons to the 2008 mortgage crisis.
Corey Shirey, who’s studying to be a pastor in Oklahoma, expected to be paying his student debt for 15 years, before the president announced his plan. He said pastors in his state usually start off making around $40,000 a year.
As soon as the application went live, he applied for forgiveness. Since he received a Pell Grant in college — he was raised by a single mother who couldn’t afford to save for his education — he’ll be getting $20,000 in forgiveness and will be left with just around $5,000 in debt.
“It’s so exciting,” said 27-year-old Shirey. “This lets me breathe.”