Biden Forgiveness is Still Moving Forward
Despite at least 5 major conservative lawsuits in recent weeks, Biden’s administration continues to move forward going live with the application this week and announcing that processing will begin on October 23, 2022.
If your hair sticks up when following lawsuits, you’re not alone. The most notable case, Nebraska v. Biden, consisting of six states, gained some traction on September 29, 2022. A motion for a temporary restraining order was made, followed by an injunction to permanently block the relief. A final decision has yet to be made.
The Lawsuits Have Already Spurred Changes to Eligibility
Though most of these lawsuits are still undecided, the administration has already reacted to some of them, slightly changing eligibility for student loan forgiveness.
Since the suits, the administration has pulled back, removing privately held student loans, including:
- FFEL loans
- Perkins loans
These loans are not eligible for forgiveness unless the borrower consolidated them into a Direct Loan before September 29, 2022.
This small change in eligibility could impact over 700,000 borrowers. While this action cuts off eligibility for some federal student loan borrowers, it’s likely a strategic move from the administration to protect the majority of borrowers from the lawsuits.
Download The Chipper Guide to Biden Forgiveness to learn more about Biden Relief.
Speed Matters, Don’t Delay Your Application
The landscape of eligibility for student loan forgiveness is rapidly changing. With the application live, borrowers are swarming to studentaid.gov and the Chipper app to apply for forgiveness.
Borrowers who apply for forgiveness before the lawsuits are resolved may have a better chance of forgiveness. No one knows how the courts will rule, but as long as the program is not formally halted, borrowers have an opportunity to take advantage of up to $20,000 in forgiveness.
Inside the Looming Lawsuits
The states of Arkansas, Iowa, Kansas, Nebraska, Missouri, and South Carolina have filed suit against the Biden administration to block forgiveness. One of the central claims of the case is authority.
The states say the president doesn’t technically have the power to make these far-reaching policies. Forgiving this much student debt could negatively impact state revenues, which is one of the reasons behind the suit. It’s worth noting that with this scale of forgiveness, state student loan servicers are likely to lose out revenue they’d collect from borrowers.
Additionally, the states argued that the policy would hurt the revenues of student loan servicer MOHELA.
The Pacific Legal Foundation, a nonprofit legal organization
Conservative nonprofit the Pacific Legal Foundation filed suit against the administration on behalf of a federal student loan borrower. The borrower is eligible for Public Service Loan Forgiveness (PSLF). The lawsuit claims wiping out through Biden’s initiative will lead to an unwanted tax bill.
The administration clarified that borrowers must apply for forgiveness, which will not automatically be granted. That means the borrower can avoid this tax bill by sticking with PSLF.
The judge in this case has denied the plaintiff a temporary restraining order and the temporary injunction to block the policy. At present, the judge is debating a denying a permanent injunction to block the policy, which could be seen a win for the administration and the fate of the policy.
Arizona’s attorney general
Arizona Attorney General Mark Brnovich filed a suit against the administration in reaction to the announcement, claiming that the forgiveness could discourage young lawyers that would otherwise qualify for PSLF from applying to state jobs. The suit claims the policy will negatively impact state employment, making it harder to recruit lawyers for government roles.
Wisconsin Institute for Law and Liberty, a law firm
The conservative law firm, the Wisconsin Institute of Law and Liberty, filed suit on behalf of the Brown County Taxpayers Association. The lawsuit claims that the forgiveness policy is an overextension of authority and has “improper racial motives” as it disproportionately helps borrowers of color.
Ensure You are Prepared to Tackle Student Debt
Don’t wait. You can apply for Biden forgiveness through the Chipper app now, and ease the burden of the changing landscape.
Beyond submitting your application, Chipper will keep you informed of changes, help you ensure that you are on the right repayment plan, and provide additional solutions for tackling student loan debt when payments resume in January.