The latest decision has no immediate effect because the Biden administration is already barred by the 8th Circuit Court of Appeals from discharging student loans under its debt relief program. The appeals court temporarily suspended debt relief on Oct. 21 as it weighed an emergency request from six GOP states to block the policy.
That case, which is being led by Nebraska Attorney General Doug Peterson and Missouri Attorney General Eric Schmitt, is likely next to head to the Supreme Court. The states have already said in court filings that they intend to ask the High Court to intervene if they lose their injunction against the debt relief scheme.
Biden has pledged to continue fighting in court to defend his debt relief package, which offers up to $20,000 in loan forgiveness to people earning less than $125,000 and families earning less than $100,000. $250,000.
This week, the White House delivered the message that Republican officials are blocking debt relief for millions of Americans.
Biden announced Thursday that his administration would approve applications for some 16 million Americans by the end of the week – but relief is on hold due to the GOP-led lawsuit.
“Republican members of Congress and Republican governors are doing everything they can, including taking us to court, to deny aid and even their own constituents,” Biden said Friday during a college address. community in Albuquerque, New Mexico. He called the GOP’s opposition to the plan “just misguided” and “hypocritical” because some Republican lawmakers benefited from a pandemic loan forgiveness program for small businesses.
The Biden administration has continued to accept and process requests for debt relief even when it is barred from paying the loans.
The Department of Education already sent millions of approved applications to its contracted student loan services on Friday, according to people familiar with the matter. The agency ordered the companies to suspend the effective application of the relief to borrowers’ accounts due to the court order.
Nearly 26 million borrowers, in total, have now provided “the information required to be considered for debt relief,” the White House said. The Department of Education estimates that about 40 million Americans are eligible for relief if they apply for it.
The legal challenge dismissed by Barrett on Friday was brought by the Pacific Legal Foundation, a libertarian group, which argued that Biden’s debt relief was an unlawful abuse of power. The lawsuit had argued that debt relief would leave two borrowers worse off financially because Indiana plans to mandate loan forgiveness.
After the initial filing of the lawsuit, the The Biden administration announced that borrowers are lining up for automatic debt cancellation would be allowed to opt out of the student debt relief program if they do not want the relief.
But lower courts ruled Indiana borrowers suffered no harm because the Biden administration would not actually cancel their loans.
“None of their debts will be forgiven and they will not be subject to a debt reduction tax,” a three-judge panel of the 7th Circuit Court of Appeals wrote in a unanimous decision last week. “It follows that the program does them no harm and that they do not have standing to sue.”
Caleb Kruckenberg, an attorney at the Pacific Legal Foundation, said after Barrett’s ruling that the group would “continue to fight this program in court.”
“Practically since the announcement of this program, the administration has sought to avoid judicial review. So far they have been successful,” he said in a statement. “But that doesn’t change the fact that this program is illegal from top to bottom.”
Most borrowers must complete an application for relief. But the Indiana borrower pair are among several million borrowers for whom the Department of Education is able to automatically provide debt relief because it already has their income information.
The agency has already sent notices to those borrowers with instructions on how they can decline any loan forgiveness, if they wish, before the Nov. 14 deadline.
James Kvaal, a senior department official, said in a court filing that only 102 borrowers had taken advantage of the opt-out, as of October 17. It is unclear how much higher the number is now.