The U.S. Department of Education (ED) had changed its eligibility requirements for student loan forgiveness multiple times before meeting its match.
On Sept. 29, the policy was that any student with federal loans that are not held by the Education Department cannot get debt relief through consolidating the loans into direct loans. As per NPR, as many as 800,000 borrowers were excluded from loan relief due to those guidelines set forth by the ED.
According to studentaid.gov at the time, only loans held by the ED could be forgiven under President Biden’s debt relief plan. That included PLUS loans and graduate PLUS loans. Loans that were eligible for pauses on student loans were also eligible for debt relief.
Defaulted student loans were eligible for forgiveness, and Parent PLUS loans were also eligible as long as they are federally-held loans with the ED.
Most FFEL loans and Perkins loans were disqualified from receiving debt relief if they were not held by the ED directly. However, borrowers with those types of loans who applied before Sept. 29 were still eligible for forgiveness.
Borrowers who meet under the income threshold that the Biden administration had set forth were eligible for up to $20,000 in debt forgiveness, while other borrowers were eligible for up to $10,000 in debt forgiveness.
Unfortunately the Biden administration’s plan for student loan forgiveness has since been interrupted. According to an article by The Washington Post, on Nov. 10 a Texas federal judge, Mark Pittman, ruled the loan forgiveness policy “unlawful” after presiding over a lawsuit from The Job Creator’s Network.
The Washington Post article stated that “the suit alleges the administration violated federal procedures by denying borrowers the opportunity to provide public comment before unveiling the program.”
As of right now, because of the ruling of the federal court, no new applications for loan forgiveness are being accepted by the federal government at this time.
However, the ED has been sending out loan forgiveness email decisions on behalf of the Biden administration to those who applied before the federal ruling. Among an already hectic situation, these emails have only made loan borrowers even more confused.
No student loans are able to be forgiven because of the federal ruling, but the email from the Biden administration remains hopeful that the Supreme Court will overturn the federal court’s decision.
Some critics, such as Angela Morabito from Fox News, have been suspicious that the Biden administration continues to give “false hope” regarding the student loan forgiveness policies being approved by the Supreme Court. Morabito states in her article that:
“President Joe Biden’s illegal and hastily-constructed student debt bailout worked well for Democrats in the voting booth but terribly for them in the courts … Biden extended the [student loan moratorium] because he sees the writing on the wall: the bailout was illegal from the start and thus doomed in the courts.”
However, Steve Vladeck from CNN holds a very different perspective. Vladeck states in his article that:
“[T]he biggest problem with Pittman’s ruling [is] why he allowed the case to be brought in the first place. Every other challenge to the Biden program that’s been brought thus far have been thrown out by trial courts for lack of standing … [T]he problem was the same: like it or hate it, when the government hands out a benefit to a class of individuals, that doesn’t usually injure other individuals discreetly.”
The ED states on their website that the average amount of loans that students in Ohio owe is $34,923. It also says that there are over 1.7 million borrowers who have federal loans. Altogether, there is $62.6 billion owed by Ohioan federal loan borrowers.
If the federal ruling on student loan forgiveness were to be overturned by the Supreme Court, Ohioans would not even have to worry about state taxation on their loan forgiveness.
According to an article by The Statehouse News Bureau, The Ohio Department of Taxation’s Gary Gudmundson confirmed that, under the current state law, student debt relief of this kind “is not taxable.”
Many Ohio student loan recipients anxiously await the Supreme Court’s ruling on the Biden administration’s debt relief policy, especially current college students.