Personal Finance

Biden administration stops taking applications for student loan forgiveness

Key Points
  • Student loan borrowers cannot apply for forgiveness at this time.
  • A federal judge in Texas struck down the Biden administration's plan Thursday evening.
  • The decision "was about as wrong and weird as any federal court ruling I can recall reading," said Laurence Tribe, a Harvard law professor.
U.S. President Joe Biden is flanked by U.S. Secretary of Education Miguel Cardona as he speaks about administration plans to forgive federal student loan debt during remarks in the Roosevelt Room at the White House in Washington, U.S., August 24, 2022.
Leah Millis | Reuters

The Biden administration has stopped accepting applications for federal student loan forgiveness after a court struck down its plan on Thursday evening.

"Courts have issued orders blocking our student debt relief program," according to a note on the forgiveness application page at "As a result, at this time, we are not accepting applications. We are seeking to overturn those orders."

The suspension of the forgiveness program comes shortly after a federal judge in Texas rejected President Joe Biden's executive action in August to cancel up to $20,000 in student debt for tens of millions of Americans.

"In this country, we are not ruled by an all-powerful executive with a pen and a phone," wrote Judge Mark Pittman of the U.S. District Court for the Northern District of Texas, in his 26-page decision. Pittman, who was appointed in 2019 by former President Donald Trump, sided with the Job Creators Network Foundation, a conservative advocacy group.

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The group had called Biden's plan "irrational, arbitrary and unfair," and accused the president of overreaching his authority. The complaint argued that the White House ignored federal procedures by not seeking public comment on its program.

The Biden administration said the Justice Department has already appealed the decision.

"We believe strongly that the Biden-Harris Student Debt Relief Plan is lawful and necessary to give borrowers and working families breathing room as they recover from the pandemic and to ensure they succeed when repayment restarts," Education Secretary Miguel Cardona said in a statement. "Amidst efforts to block our debt relief program, we are not standing down."

The main obstacle for those hoping to bring a legal challenge against Biden's plan has been finding a plaintiff who can prove they've been harmed by the policy.

"Such injury is needed to establish what courts call 'standing,'" said Laurence Tribe, a Harvard law professor.

For that reason, Tribe said he was floored by the Texas judge's ruling.

"Judge Pittman's decision was about as wrong and weird as any federal court ruling I can recall reading," Tribe said. "He was wrong to decide the merits without first deciding whether either of the two plaintiffs had standing."

Obstacles for Biden's forgiveness plan mount

The president's student loan forgiveness plan was already on hold from a challenge brought by six Republican-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — which also accused the president of overstepping his authority.

A federal judge rejected the states lawsuit, saying that while they raised "important and significant challenges to the debt relief plan," they ultimately lacked legal standing to pursue the case.

The GOP-led states didn't give up after their lawsuit was thrown out. They filed an appeal, and asked the court to stay the president's plan, which was supposed to start unfolding in October, while their request is considered.

The 8th U.S. Circuit Court of Appeals granted the states' emergency petition, leaving the Biden administration unable to start forgiving any student debt.

However, the Education Department had encouraged borrowers to continue applying for forgiveness since its plan had not yet been struck down.

26 million borrowers have applied for forgiveness

On Aug. 24, Biden announced that tens of millions of Americans would be eligible for student loan forgiveness: up to $20,000 if they received a Pell Grant, which is a type of aid available to low-income families, and as much as $10,000 if they didn't.

Long before Biden — acting on pressure from consumer advocates and other Democrats — made his move, Republicans had criticized student loan forgiveness as a handout to well-off college graduates. They also argued the president didn't have the power to forgive consumer debt on his own without Congress.

Unsurprisingly, the legal challenges poured in. So far, at least six lawsuits have been brought against the president's plan. 

Originally, the Education Department had said that borrowers would receive forgiveness within six weeks after they applied. The full application launched Oct. 17, and within three weeks, some 26 million people had requested the relief. To date, 16 million of those requests have been approved.

For now, the department says it will hold the applications of borrowers who have already applied.

Borrowers should sit tight and wait to see what happens, said higher education expert Mark Kantrowitz.

"The program is suspended but the U.S. Department of Education is appealing," Kantrowitz said, "And there were several aspects of the Texas court ruling that are unusual and may yield a successful appeal."