Supreme Court nominee and U.S. Court of Appeals Judge Amy Coney Barrett on Capitol Hill in Washington, October 21, 2020.
Ken Cedeno | Reuters
The Supreme Court on Friday rejected a second request to block the Biden administration’s student loan forgiveness program.
Justice Amy Coney Barrett denies a emergency app to block a program launched Tuesday by the Pacific Legal Foundation, a conservative law group, on behalf of two borrowers in Indiana.
On October 20, Barrett refuse a similar request from the Brown County Taxpayers Association of Wisconsin.
Barrett is responsible for such applications issued from cases in the 7th U.S. Circuit Court of Appeals, including Indiana and Wisconsin.
Friday’s decision has little practical effect. Currently, student loan forgiveness is still delayed from a challenge The six states are led by the Republican Party. An 8th Circuit appeals court judge in October approved the states’ emergency petition to uphold the plan pending the states’ appeal review.
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26 million borrowers have applied for student loan forgiveness
Since the White House in August disclosure its plan – cancel $10,000 on student loans for most borrowers and up to $20,000 for those who have Pell Grants for low-income families – it has faced at least six lawsuits.
Nearly 26 million Americans have applied for student loan forgiveness, and the Biden administration has approved 16 million requests, the White House said on Thursday. The administration has continued to encourage borrowers to apply for relief despite recent challenges.
Caleb Kruckenberg, an attorney at the Pacific Legal Foundation, in an emailed statement said, “We are disappointed by today’s denial but will continue to fight this program in court.”
“In fact, since this program was announced, the administration has sought to avoid judicial scrutiny,” Kruckenberg said. “So far they’ve been successful. But that doesn’t change the fact that the program is illegal from start to finish.”
‘Standing’ is still an issue for forgiveness challenges
Experts say the main obstacle for those hoping to block the president’s action is finding a plaintiff who can prove they have been harmed by the policy.
“Such injury is necessary to establish what the courts call ‘stand’,” The Laurence . tribe, a Harvard law professor, recently told CNBC. “No individual, business or state is hurt the way private lenders would if, for example, their student loans were cancelled.”
Against this backdrop, Barrett’s decision to deny the Pacific Legal Fund’s request is not surprising, said higher education expert Mark Kantrowitz.
“There is little fundamental difference between the original lawsuit and the new one, which shows a lack of legal status,” he said.
In the Pacific Legal Foundation case, Indiana-based plaintiffs Frank Garrison and Noel Johnson said they would financially harmed if some of their student debt is automatically forgiven as they will be subject to state tax on that canceled debt.
Indiana is one of the states that said forgiveness would be taxed at the state level and potentially district level.
Both Garrison and Johnson are attorneys; Garrison worked for the Pacific Legal Organization and Johnson for the Public Interest Legal Foundation. they are pursue relief through the debt forgiveness program for public service loans, which allows people who work for the government or specific nonprofit organizations to cancel their debt after 10 years or 120 payments. PSLF forgives is not considered taxable income.
After the initial lawsuit, the Department of Education said that borrowers could opt out if they did not want to be forgiven.
Student loans ‘in limbo’
As legal challenges mount, financial advisors say borrowers are still wondering where student loan forgiveness stands.
“The intervention of the courts is really troubling because people are looking for it,” says Ethan Miller, a certified financial planner and founder of Planning for Progress in Washington, DC. certainty about what is going on with their student loans. Miller specializes in student loan clients.
“There was a plan that clearly outlined the steps,” he said. “And everyone is put in limbo.”
