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Student Loan Debt Relief on Hold After Federal Court Ruling

A federal judge in Texas strikes down the Biden administration's student debt forgiveness program. The administration is appealing the ruling.

$100 bills in a staggered layout
A federal court has blocked President Biden's student loan debt relief program.
Sarah Tew/CNET

It looks like it'll be a while before student borrowers know whether they'll have any of their debt forgiven. The US Department of Justice has appealed a Thursday ruling by a federal judge in Texas who struck down the student loan debt relief program put in place by US President Joe Biden. It could now reportedly take weeks or even months before the issue is resolved.

The judge called the program illegal, saying the Biden administration didn't follow federal procedures for seeking public comment before the effort was announced. Secretary of Education Miguel Cardona pushed back, calling the program both necessary and lawful.

As a result of the ruling, the Department of Education has stopped accepting applications for forgiveness, but Cardona said that the department would "continue to keep borrowers informed about our efforts to deliver targeted relief."

The Biden administration's plan would forgive up to $10,000 in federal student loan debt for borrowers making less than $125,000 a year (or $250,000 for married couples). Recipients of a Pell Grant for low-income students would have $20,000 of debt erased.

Biden put the student loan forgiveness plan in place with an August executive order. The administration pointed to the COVID pandemic and to a federal law it says empowers the education secretary to lessen the burden that borrowers may suffer as the result of a national emergency.

But a lawsuit filed in Texas on behalf of two plaintiffs by a conservative group called the Job Creators Network Foundation argued that the administration hadn't observed the federal Administrative Procedure Act while rolling out the program.

The case now goes to the 5th US Circuit Court of Appeals. A staff attorney at the National Consumer Law Center told CNN that the issue could possibly go all the way to the Supreme Court.

More than 26 million borrowers have applied for student loan debt relief, with 16 million applications already approved and awaiting an OK from the courts in order for debt to be discharged, Cardona said.

Last month, in a different case, the student loan forgiveness plan was temporarily put on hold by a federal appeals court as it considers a challenge to the program by six Republican-led states.