The federal government has said the new policy will cut nearly 800,000 borrowers from the debt forgiveness program, though nearly 4 million borrowers have FFEL loans. On the same day the lawsuit filed, the federal government barred any remaining FFEL borrowers from consolidating their loans. The states argue they would lose money because borrowers would collectively ditch their existing FFEL loans for those offered by the government. 29, the government had allowed borrowers to consolidate these loans into one loan owned by the federal government, thereby allowing it to cancel student debt. Those loans are backed by the federal government but held by commercial banks. The states also said quasi-state agencies that service old student loans in the FFEL program would lose money. Six conservatives states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina, filed a suit together, arguing Biden had overstepped his authority. A hearing in that case, in Missouri federal court, is scheduled for Wednesday.
More: Legal challenges stack up for Biden's student debt forgiveness plan A federal judge in Indiana dismissed the group’s request to halt the forgiveness plan, saying the plaintiff couldn't be injured if his debt wasn't being forgiven. But within days of that suit being filed, the White House said borrowers would be able to opt out of the relief plan. One group, the Pacific Legal Foundation, sued to stop mass cancellation on the grounds that borrowers living in some states would be unfairly taxed. These changes mean fewer applicants can take advantage of the relief. But the loan program, or at least the publicly available details about it, has evolved as the application window approached and legal challenges mounted. When will student loans be forgiven? : What to know about debt relief applications Who is suing over student loan forgiveness?Ībout 43 million people hold $1.6 trillion in federal student loans, and about 40 million are expected to qualify for the one-time debt cancellation. 15 if they want the debt cancellation applied to their balances before the end of a freeze on payments that began during the pandemic and ends in January. Borrowers will have through the end of 2023 to apply for the student debt relief. The feds have encouraged borrowers to file their forms by Nov. The Education Department has said borrowers who apply in October could have a chunk of their debt wiped out as soon as November. Officials said they're using "best practices and lessons learned" to make sure the site can handle the volume of applications.īorrowers are eligible to receive $10,000 or $20,000 in debt relief depending on their income and whether they received a Pell Grant in college. When news first broke about the White House's debt forgiveness plan, its website focused on federal financial aid buckled under the weight of borrower interest.
Applicants will not be required to log in with their federal student aid ID, nor will they have to upload any documents.
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