The Biden administration’s student loan policies are facing mounting legal challenges, increasing anxiety among borrowers as repayments are due to resume in the fall. The latest challenges put loan forgiveness for 800,000 borrowers, and changes to the borrower defense student debt relief program, at risk.
The policy changes aim to ease the process for those defrauded by their colleges to receive loan forgiveness. However, borrowers are struggling to understand the implications of these legal developments on their loans, with faith in receiving further relief from the administration dwindling ahead of the October repayment start date.
The recent legal challenges directly impact borrowers who were defrauded by their institutions and those who have been repaying loans for over 20 years.
In the first case, the U.S. Court of Appeals for the 5th Circuit put a temporary injunction on updated rules from the Education Department that would change how loans are discharged for individuals defrauded by their schools or whose schools closed down.
A second lawsuit was recently filed against the Biden administration over its plan to cancel $39 billion in student loans for 800,000 borrowers. The lawsuit was filed by the New Civil Liberties Alliance on behalf of the Cato Institute and Mackinac Center.
Meanwhile, borrowers are trying to navigate these legal developments and their impact on loan repayments, with many feeling confused and anxious.
These legal challenges come at a time when interest on student loans is set to reactivate in September, with loan repayments restarting in October. The growing number of legal battles over student loan policies has significantly increased compared to previous years, further exacerbating the uncertainty for borrowers.