Federal Court Blocks $20 Billion in Student Loan Forgiveness
Reason
Emma Camp
August 10, 2023
The injunction is the latest in a series of setbacks for the Biden administration’s loan forgiveness agenda.
A federal court has blocked Biden administration rules that would have provided almost $20 billion in student loan forgiveness, primarily to students who attended colleges that defrauded them.
Last July, the Education Department released new proposed rules expanding eligibility for the department’s “borrower defense” forgiveness program, as well as several other smaller loan forgiveness programs. The borrower defense program offers loan forgiveness to students whose schools engaged in misconduct or misled or defrauded them. In most cases, students eligible for borrower defense attended for-profit schools. The rules were finalized last November.
The rules allow students to more easily file claims against their colleges by “allowing for group claims, eliminating overly strict limits on when borrowers can file a claim, expanding the type of misconduct that can lead to an approved claim to include aggressive and deceptive recruitment practices, and ensuring borrowers receive timely decisions about their claims,” according to an Education Department press release.
“We are committed to fixing a broken system. If a borrower qualifies for student loan relief, it shouldn’t take mountains of paperwork or a law degree to obtain it,” Education Secretary Miguel Cardona said in a statement last July. “These proposed regulations will protect borrowers and save them time, money, and frustration, and will hold their colleges responsible for wrongdoing.” In total, the new regulations—which included changes to the Public Service Loan Forgiveness program and other student loan forgiveness policies—were estimated to cost taxpayers $19.7 billion.
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