Everything to know about Biden's student loan decision

​President Biden's student loan forgiveness program is off to quite a complicated start. Here's everything you need to know:

The latest:

The Biden administration first announced its relief plan — which forgives up to $10,000 in federal student loans for borrowers making under $125,000 a year, and up to $20,000 for Pell Grant recipients — back in August. (The president also extended the current repayment moratorium, which was set to expire at the end of August, until Dec. 31). 

"All of this means people can start finally to climb out from under that mountain of debt," Biden said in his remarks on the matter. "To finally think about buying a home or starting a family or starting a business. And by the way, when this happens, the whole economy is better off."

But the program has since been met with a bevy of lawsuits, prompting the Education Department to close its application. The applications of those who have already applied for relief will be held while the challenges play out.

What's going on in the courts?

Well first and foremost, you might be wondering how Biden has the authority to cancel student debt without approval from Congress. And the short answer to that question is, well, it's complicated. The president is actually employing authority pulled from the 9/11-era HEROES Act, which gives the Education Secretary the power to relieve student loan requirements during periods of wartime or national emergency, for example. And in this case, the national emergency is COVID-19. But given Biden's use of executive action, by which he circumvented Capitol Hill, lawsuits have since followed. 

For instance, a federal appeals court on Monday, Nov. 14, blocked the relief program after six Republican-led states argued that Biden overstepped his authority and that his plan threatens their "future tax revenues," CNBC writes. The court's injunction will "put the program on hold pending an appeal of a lower court ruling that had allowed the debt relief program to go forward." A judge had initially ruled against the six states — Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina — claiming they lacked actual standing to pursue a challenge. You see, "not just anyone can file a lawsuit claiming that an executive order is illegal," Vox notes. Rather, a plaintiff must prove they would be "personally harmed by the action." 

But the appeals court on Monday decided Missouri had in fact been wronged by Biden's plan, and that "since at least one party likely has standing, we need not address the standing of the other states," the panel concluded, per CNBC. 

Moreover, the preliminary Nov. 14 injunction followed a previous decision from Texas-based U.S. District Court Judge Mark Pittman, who struck down the relief plan in the wake of an October challenge from the conservative Job Creators Network Foundation. The group filed its suit on behalf of two student loan borrowers, who claimed the administration had violated federal procedure by not seeking public comment on the program before implementing it. "In this country, we are not ruled by an all-powerful executive with a pen and a phone," the judge wrote in his decision. "Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government. … But it is fundamental to the survival of our republic that the separation of powers as outlined in our Constitution be preserved." Specifically, Pittman's ruling rebuked the idea that the HEROES Act allows for widespread debt cancellation, and that doing so was a valid and necessary response to the pandemic. He also said the move required congressional authorization.

For its part, the White House stands by its authority to implement the program. "The administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle-class Americans," said White House Press Secretary Karine Jean-Pierre, per The Associated Press. 

Will this go to the Supreme Court?

Per AP, it's likely the Texas ruling and the challenge from the six GOP-led states ends up before the Supreme Court. Before they get there, however, "the 5th and 8th Circuit appeals courts — both dominated by conservative judges — will rule separately in each case."  

In both instances, "appellate courts would not issue a final ruling on the validity of the [debt relief] program, but on whether it can go forward while challenges proceed," AP adds. 

If SCOTUS does agree to take on a student loan forgiveness case, student loan expert Nika Booth expects the court's conservative majority to vote against it, she told NextAdvisor. 

Well, in the meantime … who is eligible for forgiveness?

First and foremost, only borrowers making under $125,000 a year (and married couples or heads of households making less than $250,000 a year) are eligible for the maximum of $20,000 in federal loan forgiveness. Those "seeking debt relief can provide either their 2020 or 2021 incomes" when applying, CBS News writes; 2022 income will not apply, notes The New York Times. Further, only federal student loans, including PLUS loans, are eligible; neither private loans nor Federal Family Education Loans will qualify, the Times adds. Graduate loans qualify as well, though they are not eligible for the extra $10,000 offered to Pell Grant recipients, adds The Washington Post. 

Current students are eligible only if their parents' income falls below the qualification cap, and if their loans originated before July 1. 

How do I apply?

Most borrowers will have to apply for forgiveness through the Department of Education at StudentAid.gov. That said, the application is currently locked amid legal challenges.

In the meantime, "borrowers should sit tight," higher education expert Mark Kantrowitz told NextAdvisor. "It can take time for the cases to work their way through the courts." At this rate, it's also unlikely borrowers will see any forgiveness on their balances between now and the end of the year, added Booth, the student loan expert. 

In the meantime, you can get ahead by "staying informed," NextAdvisor continues. Sign up for updates from the Department of Education, or maybe even research other possible debt relief programs, like Public Service Loan Forgiveness or Teacher Loan Forgiveness. 

What is the impact of widespread forgiveness?

According to the Congressional Budget Office, the relief plan will cost roughly $400 billion over the next 30 years. Forty-three million borrowers are said to be eligible for some forgiveness, "with 20 million who could get their debt erased entirely," AP writes. 

Per the White House, 26 million people have thus far applied for forgiveness, and 16 million have been approved.

What are some of the arguments for and against canceling student debt?

Debt relief is a hotly contested issue! Those in favor of widespread loan forgiveness claim that student debt delays and prevents borrowers from starting their lives — whether that means buying a house or having children — and also weighs more heavily on Black and Hispanic families, NerdWallet reports. Proponents also typically emphasize that "not all borrowers have degrees that boost earnings."

As for arguments against student debt cancellation, the opposition often claims that forgiveness is unfair to those who have already paid off their loans or didn't go to college; tends to disproportionately benefit wealthy borrowers (those with the most debt often have a graduate degree or higher, leading to higher earnings); and fails to solve the underlying student debt crisis, per NerdWallet. Critics are also worried about inflation, which they fear might worsen under the new policy.

Has the administration done anything else in the way of debt relief?

In June, the Education Department announced it would cancel $6 billion in loans from about 200,000 borrowers who claimed they were misled and defrauded by their college. And the administration also previously approved $26 billion in loan forgiveness for "about 1.3 million borrowers, including public service employees and defrauded students," CNBC writes.

Update Nov. 15: This article has been updated throughout to reflect the legal landscape surrounding the debt relief program.