Texas: A federal judge in Texas on Thursday blocked President Joe Biden's student loan forgiveness program, delivering a victory to a conservative advocacy group that sued to strike down the plan.
The move to forgive up to $10,000 in federal student loans for many Americans has been stalled.
The Job Creators Network Foundation filed a lawsuit in October on behalf of a borrower who does not qualify for the full $20,000 in debt relief and one who is ineligible altogether.
Federal procedures 'violated'
The suit alleges the administration violated federal procedures by denying borrowers the opportunity to provide public comment before unveiling the program.
US District Judge Mark T. Pittman, who was appointed by Donald Trump, declared the policy unlawful in the Thursday order.
It comes after the US Court of Appeals for the 8th Circuit last month granted a stay against the loan forgiveness program in a separate lawsuit brought by six Republican-led states.
The cases are among a growing number of legal challenges to stop Biden's program. Some of those suits, including one filed in Indiana and another in Wisconsin, have been dismissed for lack of standing, but others are ongoing.
Republican attorneys general, top lawmakers and conservative groups have been discussing legal options to dismantle Biden's plan, which they say represents illegal executive overreach, since he announced it in August.
A week after Biden unveiled the policy, the president of the Job Creators Network — founded by Bernie Marcus, a GOP donor who co-founded Home Depot — told Fox News the group was building a legal team and working with outside advisers to prepare a lawsuit.
In the Texas case, the plaintiffs argued, in part, that the Biden administration made arbitrary decisions about who would qualify for debt forgiveness and how much of their balance would be canceled. Biden's loan relief plan would cancel up to $10,000 in federal student debt for borrowers who earn up to $125,000 annually or up to $250,000 annually for married couples. Borrowers who received Pell Grants are eligible for an additional $10,000 in forgiveness.
Alexander Taylor, one of the plaintiffs in the case, falls under the income threshold and is eligible to have $10,000 knocked off the $35,000 in student loans he holds for an undergraduate degree from the University of Dallas, according to the complaint. Yet because he never received a Pell Grant, a form of federal aid for low-income students, he does not qualify for the additional $10,000 provided to Pell recipients.
Loans held by private entities
Myra Brown, the other plaintiff in the lawsuit, is ineligible for Biden's plan because her federal loans, originated through the defunct Federal Family Education Loan (FFEL) program, are held by private entities. Until late last month, commercial FFEL borrowers like Brown could consolidate their loans into a Direct Loan to become eligible for Biden's plan.
But the Education Department reversed the policy to head off legal challenges such as the one being brought by the six states.
The decision left Brown, who owes $17,000 in student loans for a graduate degree from Southern Methodist University in Dallas, without access to the program.
In a court filing responding to the complaint, the Justice Department argues that the 2003 statute underpinning Biden's plan doesn't require notice and comment. That law, known as the Heroes Act, authorises the secretary of education "to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies."
Justice attorneys argue that the parameters of the program were informed by research that shows the risk of delinquency and default is acute among lower-income borrowers and Pell recipients. They said Brown and Taylor are not entitled to any amount of loan forgiveness and their grievances do not amount to a concrete injury.