Supreme court to hear arguments on Biden's student loan forgiveness plan next year
The Supreme Court agreed Thursday to hear arguments over President Joe Biden's student loan forgiveness plan in February 2023. But an injunction blocking the administration's relief plan remains in place, according to a Supreme Court brief.
The inquisition in question was placed by the St.Louis-based 8th Circuit Court of Appeals. It stems from a lawsuit issued by Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina.
These six states argue the plan would harm their tax revenues. They also disagree with the Biden administration's efforts to justify its student loan forgiveness plan under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003. The Biden administration argues that this law gives it the authority to forgive student loan debt in response to the national emergency of COVID-19.
However, the six states claim it is a false "pretext" to approve widespread student loan relief.
The student loan forgiveness plan aims to forgive up to $10,000 in federal student loans or up to $20,000 for Pell Grant recipients. Eligible borrowers can’t make more than $125,000 per year if filing single or $250,000 for married couples.
But should the White House's student loan forgiveness initiative come to fruition, it won't apply to private student loans. If you hold private student loans, you could consider refinancing to a lower interest rate. Visit Credible to find your personalized interest rate without affecting your credit score.
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Appeals court upholds student loan forgiveness block in separate lawsuit
The Supreme Court's latest case isn't the only legal challenge faced by Biden's student loan forgiveness plan. On Wednesday night, the 5th U.S. Circuit Court of Appeals ruled it would not reverse a separate November 10 ruling by U.S. District Judge Mark Pittman, who blocked the plan and deemed it an "unconstitutional exercise of Congress’s legislative power."
But despite legal challenges, the Department of Education has begun sending emails notifying borrowers that qualify for student loan forgiveness.
"We reviewed your application and determined that you are eligible for loan relief under the Plan," Education Secretary Miguel Cardona wrote in an email to borrowers. "We have sent this approval to your loan servicer. You do not need to take any further action.
"Unfortunately, a number of lawsuits have been filed challenging the program, which have blocked our ability to discharge your debt at present," Cardona continued. "We believe strongly that the lawsuits are meritless, and the Department of Justice has appealed on our behalf."
If you’re a private student loan borrower and want to reduce your monthly payment, you could consider refinancing to a lower interest rate. Visit Credible to compare multiple student loan lenders and find the one with the best rate for you.
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Biden administration extends student loan payment pause
As the Biden administration defends its student loan forgiveness plan in courts, it has extended its federal student loan payment pause.
The payment pause will run through 60 days after June 30, 2023, or after the administration is legally permitted to implement its student debt forgiveness plan, whichever comes first.
This was another extension of a provision in the 2020 CARES Act, which allowed the government to pause payments on eligible student loans held by the Department of Education and reduce interest rates to 0%.
"The extension will alleviate uncertainty for borrowers as the Biden-Harris Administration asks the Supreme Court to review the lower-court orders that are preventing the Department from providing debt relief for tens of millions of Americans," the White House wrote in a statement.
If you hold private student loans, these won't qualify for any federal loan forgiveness., but you can consider refinancing your loan to a lower interest rate to help you save on your monthly payments. Visit Credible to speak to a student loan refinancing professional to see if this option is right for you.
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