Court block on student loan forgiveness continues, but there’s a big update

There is a new development in the lawsuit challenging President Biden’s Comprehensive Student Loan Forgiveness Initiative. There is a possibility that

This is the latest.

Appeals court temporarily suspends Biden’s student loan forgiveness plan

Biden launched an unprecedented student loan forgiveness plan in August, Online application last month. Under this initiative, up to 40 million borrowers with government-administered federal student loans can receive them. Up to $20,000 in Student Loan Cancellation Your income for 2020 or 2021 was within the program income limits.

However, several lawsuits threaten the plan.with multiple lawsuits dismissed A federal court judge appealed one such dismissal to the Eighth Circuit Court of Appeals by a coalition of Republican-led state attorneys general. Temporarily blocked student loan forgiveness program last month. The ruling is temporary and the court is considering whether to impose a longer interim injunction, which could prove far more problematic for the program’s future.

New correspondence sheds more light on FFELP’s challenges to student loan forgiveness plans

One of the coalition’s primary legal allegations in the lawsuit challenging Biden’s student loan forgiveness plan is that the initiative will harm the state financially because state-affiliated FFELP agencies will lose income as a result of the loan forgiveness. To be eligible to sue, the state must show that there is tangible harm associated with the challenged policy.

The Family Federal Education Loan Program (FFELP for short) is the old federal student loan program originated by private lenders, guaranteed by nonprofits or state affiliates, and insured by the federal government. She MOHELA, a Missouri-based agency, is one such FFELP agency (MOHELA also happens to be a contractor for the U.S. Department of Education’s Direct Loan Program and currently has a public service loan exemption. also manages the program). A coalition of states (including Missouri) challenging Biden’s student loan forgiveness plan argued that MOHELA, and therefore Missouri, would be financially harmed by the loan forgiveness.

However, Biden administration attorneys have argued that MOHELA is an independent agency that can sue in its own name and could be sued. .

A new letter published this week casts further doubt on MOHELA’s direct involvement in the legal challenge.and Court submission On Tuesday, Justice Department attorneys notified the Eighth Circuit Court of Appeals that: Letter sent by Mohera MOHELA has confirmed that it was not a party to the lawsuit brought by the state and was not involved in the determination of the preliminary injunction.

“MOHELA executives were not involved in the Missouri Attorney General’s decision to apply for a preliminary injunction in federal court on September 29, 2022,” the agency said. “As a government agency [MOHELA] It has no shareholders and does not exist to make a profit. “

MOHELA’s statement could undermine the coalition’s claims that MOHELA and other similar FFELP institutions would be financially harmed by Biden’s student loan forgiveness plan. Not eligible for loan forgiveness Most often under the initiative, even if they are directly bundled into a consolidation loan.

Your student loan forgiveness application is still valid

The Department of Education cannot enforce student loan forgiveness while the Eighth Circuit’s temporary stay continues.But the administration still accepts Student loan forgiveness application form..

“As a result of a court order, processing of debt forgiveness has been temporarily blocked. If you are eligible, we encourage you to apply,” read a message on the application site. “We will continue to consider applications.”

The 20 million borrowers who have already submitted student loan forgiveness applications are still awaiting a preliminary injunction decision from the Eighth Circuit. But the Biden administration is showing confidence.

“We are going to win the lawsuit.” Biden’s prophecy In public comment last week.

Further Student Loan Forgiveness Reading

When can I get my student loan forgiveness? Important details about timing

New, Bigger Student Loan Forgiveness Initiative Is Coming — And It’s Not What You Think

5 Key Takeaways After Courts Stop Student Loan Forgiveness

Conversely, Biden administration announces new eligibility limits for student loan forgiveness

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