Legal challenge leaves student loan debt forgiveness program in limbo

Published: Oct. 26, 2022 at 1:10 PM CDT
Email This Link
Share on Pinterest
Share on LinkedIn

(CNN) - A legal challenge to President Joe Biden’s student loan forgiveness program has millions of people wondering, what now?

The White House had previously identified this week as the soonest some borrowers could see their debt canceled.

A federal appeals court put Biden’s student loan forgiveness program on pause for now.

“I’m still waiting for that relief right now. No one’s had their debt canceled yet,” said Cody Hounanian, executive director of Student Debt Crisis Center, a nonprofit focused on ending the student debt crisis.

Friday’s move barred the administration from cancelling loans while the court considers a legal challenge from six Republican-led states.

So what does it mean for the more than 20 million people who’ve applied for relief so far?

The Biden administration appears confident the program will prevail.

“We’re not deterred. We’ll keep fighting for you and pushing through,” said Miguel Cardona, U.S. Secretary of Education.

The administration had said Sunday was the earliest day it would start discharging loans, so people will now have to wait a little longer while the program’s fate is decided.

“I’m one of the people that were fighting for,” Hounanian said. “It’s not going to erase my entire debt, but it’s a third of my student loan debt, and it, one, opens up the door hopefully for the ability to purchase a home, invest in myself in a different way.”

The program would dismiss up to $10,000 in debt for eligible applicants, up to $20,000 if they received Pell grants.

So what should you do if you qualify? The White House is still encouraging people to apply at, and the Better Business Bureau continues to remind you to beware of ongoing scams.

“Scammers have been right there to take advantage. They know that there’s a bit of confusion about what’s going to happen next,” said Kristen Johnson, director of communications at the BBB.

The six GOP-led states that requested a preliminary injunction argue that Biden doesn’t have the legal authority to wipe out the debt.

Meanwhile, lawyers for the government argue that Congress gave the Secretary of Education the power to discharge debt in a 2003 law known as the Heroes Act while President George W. Bush was in office.