The Biden administration has stopped taking applications for student loan forgiveness after a federal judge struck down Biden's plan to forgive up to $20,000 in student loans. Abby Shafroth, Director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, joins Cheddar News to discuss how this will impact the millions of people who have already signed up for the student loan debt forgiveness program.

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What Student Loan Borrowers Should Do Amid Stalled Forgiveness Program

joining us now to discuss is Abby Shafroth, director of the student loan borrower borrower assistance project. The National Consumer Law Center. Abby thanks so much for joining us this morning. You know, how will this decision impact the millions of people who have already signed up for student loan debt forgiveness? Yeah, so we know that roughly 26 million people have already applied for student loan relief or were notified by the Biden administration that they've been found eligible because their income is low enough and they don't need to apply at all. So that works out to about one in 10 American adults. So if you're not one of them, surely someone that you know is so this is a really big deal. These borrowers are now caught a sort of legal limbo. They applied for the relief, the biden he wants to give them this relief but it's being blocked by the federal courts. Specifically, this this texas, this texas court um with a trump appointed judge that has that has vacated the program. So, you know, the administration plans to appeal. But in the meantime these borrowers are, as I said, caught in this limbo. Their applications are still being held by the White House. If the order is vacated, then the White House says it will go ahead and begin canceling their debts right away. But for now they're waiting now for those student loan borrowers, what should they do next? Yeah. So for the for the 26 million people who are already in the pipeline. They've already applied or been told they're eligible. They don't need to apply again that that's that's one thing we know for sure. We also know that for those who haven't applied, the application has temporarily been taken down by the administration. So there's sort of nothing that they can do to apply right now. So they can sign up for updates from Student Aid dot gov and they can check back because the biden administration has said that if they went on appeal or if the court orders otherwise vacated, then they'll put the application back online and then it will be available for for about a year. But you know, in the meantime, their borrowers are looking ahead at this january 1st deadline when the payment pause is currently scheduled to end. And the idea had been that borrowers would have a chance to apply and have their student loans canceled either in whole or in part before the january 1st date, which would allow about 20 million borrowers not to have to enter repayment again at all. They would have their debt fully forgiven. Other people would return to repayment with with a much Lower balance, much lower monthly payments. It would be a much smoother and more reasonable process for people to face. Instead, we're caught in this sort of legal limbo, as I said, where, where Barbara still have their full balances and as of now at least January one is still the date that they're going to be expected to start making payments again. We know from ample research, including a new report out just a couple of weeks ago from the Consumer Financial Protection Bureau that if repayment starts on january 1st, that lots of borrowers aren't going to be in a position to make payments, they won't be able to afford it, they're gonna fall behind and many will go into default. So that would be sort of a real disaster. We also know that the loan servicer aren't ready. So we're hoping, and I think that one thing that borrowers should do is they should consider engaging in some, some, you know, advocacy for themselves for their fellow borrowers pushing for the administration to extend the payment pause until until these court issues are resolved until cancelation can be effectuated. Um, and that's, you know, that's, that's not a sort of pie in the sky idea. We wouldn't be here today with, with the biden administration embracing student debt cancelation if it hadn't been for borrowers advocating for themselves and for each other. So their petitions online, their borrowers can share their stories. They can, they can talk about how important debt relief is for them and why they're not ready to resume repayments without it, that promise being fulfilled on january 1st. The other thing they can do is more practical. They can, you know, take step just in case in case the payment pause does end at the end of the year. They want to be prepared for that too. So they should update their contact information on student dot gov and with their student loan servicers to make sure they get important communications, they if they were previously signed up for auto debits will probably have to set that up again. They should look at the different student loan payment plans and figure out if there's a payment plan that's affordable for them including payment plans that set payments based on income and if there isn't a plan that's affordable to them, if they're not in a position to make payments, they should look into requesting forbearance or deferment when, when repayment resumes so that they can essentially get, get their get their payments paused for a longer amount of time, although unfortunately they will no longer get the interest protections or other protection instead of come with the pain and cause some really, really good advice there for folks dealing with this situation and potentially ways to avoid it. I do want to ask about what's next on the legal front. There has been some speculation that this decision in texas could mean that this case ends up at the Supreme Court. What's your take on this and if that were to happen, you know, what would it mean? Sure. So I'd say, you know, it's it's the texas decision makes it increasingly likely that this will ultimately end up at the Supreme Court, but it's it's still too soon to say for sure. What we do know is that the Department of Education through the Department of Justice has already appealed the decision, which which would first go to a panel of three judges on the 1st 5th Circuit Court of Appeals, uh that is based in Louisiana. Um So, you know that that panel of three judges will have the first shot at um at reassessing the opinion because there were no facts found and it was sort of decided as purely a legal matter. Um They'll get a totally fresh look at the case. They don't have to to to, you know, give any deference to the to the texas court decision. So we'll get a fresh there. You know, I will say um that the Fifth circuit is a very conservative court. Most of the appointees are were appointed by judges, were appointed by um by President trump or President Bush. And so um that, you know, that that shades what might happen here because this has become such a political issue. But on the law um on the law, I think any any legal expert who's looked at this agrees that the case should be dismissed. It should be thrown out. The plaintiffs here clearly don't have standing to bring the case, which means um which is more than just a technical matter, it means sort of as a constitutional matter. The judge doesn't have jurisdiction or authority to um to intervene in student debt cancelation or to order the biden administration on what to do. So it should be reversed. But whether it will be remains to be seen. Abby thank you so much for such an interesting conversation this morning. That's Abby Shafroth, director of the student loan borrower assistance project at the National Consumer Law Center.