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Court System Orders a Hold on the Biden Student Loan Forgiveness Plan

Student loans have been a hotly debated topic during the past few years. Now, it appears that the Biden Administration is ready to forgive $10,000 or $20,000 per borrower across the board. Even though many people are excited to have a portion of their debt wiped out, it appears that the plan is not quite ready to move forward. Multiple lawsuits have been brought against the administration as a result of the student loan forgiveness plan. Most of the lawsuits allege that the President does not have the authority to cancel student loan debt, as that is a power given to Congress under the Constitution.

On the other hand, one challenge that these lawsuits are going to face is proving that they have the standing to challenge the plan. Recently, a federal court blocked the student loan forgiveness plan from going into effect as the process is litigated. According to the director of the Student Borrower Protection Center, this is largely a procedural matter. The court cannot make a ruling until it has been fully briefed.

The lawsuit claims that there are numerous student loan servicers and companies that manage many of the Federal loans that are going to be forgiven. The lawsuit alleges that these companies are going to be harmed, particularly since some federal student loans were originally funded by private companies.

Even though the lawsuit was originally dismissed because the court system believed that the plaintiffs did not have the standing to challenge the lawsuit, they immediately filed an emergency motion with the Circuit Court of Appeals. They were granted an administrative stay, but this does not mean that the plan has been canceled.

All it means is that the plaintiffs will have an opportunity to explain why they have the standing to challenge the lawsuit. If they do so, then the lawsuit will move forward, and the plaintiffs will have to explain why they feel like the forgiveness plan is unconstitutional. The administration will also have an opportunity to defend the plan. It remains to be seen how the Department of Education is going to orchestrate the student loan forgiveness plan while this lawsuit, along with multiple others, plays out.