A U.S. judge in Texas on Thursday blocked President Joe Biden's plan to provide millions of borrowers with up to $20,000 apiece in federal student-loan forgiveness – a program that was already on hold as a federal appeals court in St. Louis considers a separate lawsuit by six states challenging it.
District Court Judge Mark Pittman, an appointee of former President Donald Trump based in Fort Worth, said the program usurped Congress's power to make laws.
Pittman said it was irrelevant if Biden's plan was good public policy because the program was "one of the largest exercises of legislative power without congressional authority in the history of the United States."
The judge noted the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act, did not provide the authorization for the $400 billion student loan forgiveness program that the Biden administration claimed it did.
U.S. President Joe Biden speaks at a press conference at the White House in Washington, D.C., the United States, November 9, 2022. /CFP
The plan, announced in August, calls for forgiving up to $10,000 in student loan debt for borrowers making less than $125,000 per year, or $250,000 for married couples. Borrowers who received Pell Grants to benefit lower-income college students will have up to $20,000 of their debt canceled.
The cancellation applies to federal student loans used to attend undergraduate and graduate school, along with Parent Plus loans. The 8th U.S. Circuit Court of Appeals had put the forgiveness plan on hold October 21.
While the stay temporarily stopped the administration from actually clearing debt, the White House has encouraged borrowers to continue applying for relief, saying the court order did not prevent applications or the review of applications. As of late October, more than 22 million borrowers had applied for debt relief.
The legal challenges have created confusion about whether borrowers who expected to have debt canceled will have to resume making payments come January 1, when a pause prompted by the COVID-19 pandemic is set to expire.
Economists worry that many people have yet to rebound financially from the pandemic, saying that if borrowers who were expecting debt cancellation are asked to make payments instead, many could fall behind on the bills and default.
The White House did not immediately provide a response to the ruling.
(With input from AP and Reuters)