The Fifth Circuit Court of Appeals has extended an injunction on new Biden administration regulations for the Borrower Defense to Repayment program, making it more likely that the rules will be struck down. This has created uncertainty for borrowers seeking relief under the program. The program provides federal student loan forgiveness and other debt relief to borrowers who were misled or harmed by their school. The new regulations overturned Trump-era rules and made it easier for borrowers to qualify for loan forgiveness.
The Biden administration has approved at least $22 billion in loan forgiveness for more than 1.3 million borrowers through the Borrower Defense program. However, a group of schools in Texas filed a lawsuit to block the new regulations, leading to the injunction imposed by the Fifth Circuit Court of Appeals. The court suggested that the new rules might be overturned because they exceeded what Congress had authorized by statute. Advocates for borrowers criticized the court’s ruling, stating that it was a troubling sign of a political climate where legal rights are being taken away.
With the Biden administration’s Borrower Defense rules blocked, the Education Department is not able to apply those regulations to pending applications for student loan forgiveness. The department has slowed or halted processing efforts for Borrower Defense applications as a result of the injunction. If the Biden loan forgiveness rules are ultimately overturned, the program would likely revert to the Trump- and Obama-era regulations. Borrowers may not receive relief under the 2019 regulations due to a three-year statute of limitations and other restrictions.
In addition to Borrower Defense, other student loan forgiveness programs are facing legal challenges. Republican-led states have sued the Biden administration to block the SAVE plan, a new income-driven repayment plan that offers relief for certain borrowers. Another mass student loan forgiveness plan proposed by President Biden is also likely to be challenged in court. These legal challenges are creating uncertainty for borrowers who are seeking relief from student loan debt. The future of student loan forgiveness programs remains uncertain as the legal battles continue.
