A federal appeals court has upheld the dismissal of a legal challenge to a key Biden administration student loan forgiveness initiative, allowing more than $51 billion in debt relief to remain intact. The initiative, known as the IDR Account Adjustment, credits borrowers with time toward student loan forgiveness under income-driven repayment plans and Public Service Loan Forgiveness. The decision paves the way for more relief after the Biden administration recently extended a consolidation deadline associated with the program.
The legal challenge to the IDR Account Adjustment was based on allegations that the program was an unconstitutional exercise of executive authority. Conservative-leaning groups argued that they would be harmed by the debt relief because it would negatively impact their ability to recruit and retain employees. However, a federal district court in Michigan dismissed the lawsuit earlier due to lack of standing, which was upheld by the Sixth Circuit Court of Appeals in its recent decision.
Following the court’s ruling, the organizations behind the legal challenge issued a statement criticizing the Biden administration’s student loan forgiveness efforts, indicating that they are reviewing their legal options, which may include an appeal to the U.S. Supreme Court. Despite the opposition, the Biden administration has continued to approve loan forgiveness under the IDR Account Adjustment, with more than $51 billion in debt relief already granted to over a million borrowers, with hundreds of thousands more benefiting from relief under the Public Service Loan Forgiveness program.
The Education Department is continuing to roll out loan forgiveness under the program every two months and has extended the consolidation deadline to June 30 to give borrowers more time to qualify for relief. Secretary of Education Miguel Cardona stated that the administration is persistent in its efforts to bring student debt relief to millions more across the country. Separately, the Biden administration is also working on a new student loan forgiveness plan that will provide targeted relief to five groups of borrowers who have experienced interest accrual, capitalization, and significant hardships, with up to 25 million borrowers expected to benefit from the new plan.
The Education Department is set to publish final regulations governing the new loan forgiveness plan in the coming months, with implementation expected later this fall. However, the new plan is likely to face court challenges, as was seen with the previous mass debt cancellation plan that was struck down by the Supreme Court last year. Despite potential legal hurdles, the Biden administration remains committed to providing student debt relief and tackling the challenges faced by borrowers struggling to repay their loans.
