A second federal appeals court has rejected a Biden administration bid to put on hold a ruling blocking the President’s student debt relief policy.
The 5th US Circuit Court of Appeals ruled Wednesday night that it would not pause a ruling from a Texas judge striking down the policy while an appeal of the ruling played out.
The move sets the stage for the US Justice Department to take the case to the US Supreme Court, which is already considering a separate request from the Biden administration that it reverse an order from the 8th US Circuit Court of Appeals blocking the loan forgiveness program.
The 5th Circuit denial was handed down by a panel made up of a George W. Bush appointee, a Barack Obama appointee and a Donald Trump appointee.
They did not explain their reasoning for rejecting the administration’s request, but the panel ordered the full appeal to be considered on an expedited basis.
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Nearly two weeks ago, the Biden administration began notifying people who are approved for federal student loan relief, even as the future of that relief remains in limbo since lower courts blocked the program nationwide. The emails from the US Department of Education to borrowers acknowledged latest legal challenges have kept the administration from discharging the debt.
Biden’s program would offer up to $20,000 of debt relief to millions of qualified borrowers, but it has been met with legal challenges.
The November 10 Texas ruling upheld by the appeals court Wednesday declared Biden’s program illegal. That prompted the Education Department to halt accepting loan relief applications.
About 26 million people had applied for student loan relief prior to the latest court decisions with 16 million of those applications being approved, according to the Biden administration.
Federal student loan payments that had been paused during the Covid-19 pandemic were set to resume in January. But the Biden administration again extended the pause period on November 22 as legal battles continue.
The payment pause will last until 60 days after the litigation is resolved. If the program has not been implemented and the litigation has not been resolved by June 30, payments will resume 60 days after that, according to the Department of Education.
“I’m completely confident my plan is legal,” said President Joe Biden in a video posted on Twitter last week, referencing his student loan forgiveness program.
“But it isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the courts consider the lawsuit,” he added.
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The Biden administration has argued that Congress granted the secretary of education the power to broadly discharge student loan debt in a 2003 law known as the HEROES Act, which was passed in the wake of the September 11 terrorist attacks.
The government’s lawyers argue that the law allows the secretary to discharge debt in an event of a national emergency, including the Covid-19 pandemic.
But the Texas federal judge found that the law does not provide the executive branch clear congressional authorization to create the student loan forgiveness program.
“The program is thus an unconstitutional exercise of Congress’s legislative power and must be vacated,” wrote Judge Mark Pittman, who was nominated by then-President Trump.
“In this country, we are not ruled by an all-powerful executive with a pen and a phone,” he continued.
The Texas lawsuit was filed by a conservative group, the Job Creators Network Foundation, in October on behalf of two borrowers who did not qualify for debt relief.
One plaintiff did not qualify for the student loan forgiveness program because her loans are not held by the federal government and the other plaintiff is only eligible for $10,000 in debt relief because he did not receive a Pell grant.
They argued that they could not voice their disagreement with the program’s rules because the administration did not put it through a formal notice-and-comment rule making process under the Administrative Procedure Act.
“This ruling protects the rule of law which requires all Americans to have their voices heard by their federal government,” said Elaine Parker, president of Job Creators Network Foundation, in a statement following the ruling on November 10.
The advocacy group was founded by Bernie Marcus, a major Trump donor and former Home Depot CEO.
If Biden’s program is allowed to move forward, individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years could see up to $10,000 of their federal student loan debt forgiven.
If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.
There are a variety of federal student loans and not all are eligible for relief. Federal Direct Loans, including subsidized loans, unsubsidized loans, parent PLUS loans and graduate PLUS loans, are eligible.
But federal student loans that are guaranteed by the government but held by private lenders are not eligible unless the borrower applied to consolidate those loans into a Direct Loan before September 29.
This story has been updated with additional background information.