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North Texas judge blocks student loan forgiveness plan

North Texas judge blocks student loan forgiveness plan

North Texas judge blocks student loan forgiveness plan
December 02
14:30 2022

U.S. district judge Mark Pittman blocked the Biden administration’s student loan forgiveness plan on Nov. 10. 

The Job Creators Network Foundation filed the lawsuit on behalf of two borrowers on the basis that the eligibility criteria were not openly discussed prior to the plan being put into place. The foundation advocates for tax reform to help small businesses and educate employees on economic freedom. 

The applications for loan forgiveness officially opened on Oct. 17 and are now closed after being blocked by courts around the country. Six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — are urging for it to remain blocked. Students have already received emails detailing that even though their applications were approved, they cannot be forgiven due to the block. 

“I’m not particularly optimistic that [loan forgiveness is] going to actually go into effect,” university political science professor Leslie Finger said. “It was a bold move for the administration to take.”

Pittman, a Donald Trump appointee, argued that the policy was unlawful because it did not have time for public comment before it was announced by the Biden administration. The lawsuit specifies that the program violated the Administrative Procedure Act, which requires federal agencies to publish notices of proposed and final rule-making and provides opportunities for public comment on the notices of proposed rule-making. 

“Normally when bureaucratic agencies issue rules, they do have some kind of comment period,” Finger said. “They’re supposed to, and the administration is trying to say that they didn’t have to do that because it was a national emergency because of the pandemic. I don’t think it’s the most outlandish justification for the decision.”

A transcript from the hearing was released, according to Business Insider, in which Pittman compared the situation to when Adolf Hitler received power in the face of an emergency. 

“What is the Court’s role if Congress has given away too much of the authority that is supposed to be deemed in that branch under the Constitution?” Pittman said during the hearing. “There has to be some sort of recourse, doesn’t there?”

People making under $125,000 a year or $250,000 in households were eligible for loan forgiveness. Applicants would receive up to $10,000 in debt relief or $20,000 if they were Pell Grant recipients. Alexander Taylor, one of the plaintiffs, is only eligible for the $10,000 relief and the other, Myra Brown, is not eligible at all due to holding private loans.

Brown previously benefitted from a federal loan forgiveness program, the Paycheck Protection Program, when her company, Desert Star Enterprises Inc., received a $48,000 business loan that was forgiven.

“My hunch is that as with many other of these kinds of cases — I’m sure these people were recruited,” Finger said. “It’s hard to imagine that they genuinely feel a grievance, but this is a common thing that happens. An advocacy group will find a plaintiff that kind of fits the bill and then recruit them.”

The average student loan debt per borrower is $28,950 as of 2022 as tuition prices continue to rise. The average annual tuition fees for attending a 4-year private university have tripled since the ‘70s with adjustments for inflation, according to the Education Data Initiative. 

“It’s not like you’re getting a two percent interest rate,” university economic associate professor Jeffrey Rous said. “ It can be six, seven percent, which is pretty substantial. There are penalties if you try to pay them off early unless, of course, you just can come up with the entire wad of cash and pay it off all at once. People who have these loans […] are kind of stuck with them.” 

Other state lawsuits allege that the program will negatively affect state revenue and entities that provide student loans. 

“The idea here is that if we do this debt forgiveness, the students will have more money they can spend on other things like cars and houses and food,” Rous said. “On the other hand, in order to pay for this, we’re going to have to raise taxes by an equal amount. So people who are paying taxes are going to have less money to spend on cars and houses.”

Student loan repayments have been paused since the pandemic and will continue to be until June 30, 2023 due to an extension made by President Joe Biden. Applications that have already been filed are currently on hold until further notice. Anyone who attempts to apply now receives a message stating that the relief is blocked. 

“I was furious but not surprised that the loan got blocked,” university music education senior Dalton Williams said. “It’s only temporary, so my situation isn’t terrible yet, but I don’t have high hopes.”

Featured Image: The Student Money Management Center is located in Chestnut Hall. Photo by Coralynn Cole

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Giovanni Delgadillo

Giovanni Delgadillo

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