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The Biden administration launched an online portal that will allow individuals with federal student loans to apply for up to $20,000 in debt forgiveness, formally kicking off a program threatened by an array of legal challenges, the Wall Street Journal reported. More than eight million people applied for relief over the weekend following the Education Department’s launch of a beta test version of the application, the administration said. Mr. Biden said the testing period was deemed a success by the Education Department’s leadership, allowing the administration to officially launch the application on Monday. The online application is available in English and Spanish and can be accessed via a computer or mobile phone. The application requires only basic information from borrowers, including their legal names, Social Security numbers, phone numbers and email addresses. Most people can complete the application in just a few minutes, White House officials said. The program will forgive up to $10,000 in debt for federal student-loan borrowers, or up to $20,000 for borrowers who received Pell Grants when they were in college. Borrowers who make less than $125,000 a year, or less than $250,000 a year for a household, are eligible for the program. A borrower’s income will be based on adjusted gross income from 2020 or 2021. GOP leaders in Missouri, Nebraska, Arkansas, South Carolina, Kansas and Iowa are seeking to stop the administration’s effort to write off hundreds of billions of dollars in student debt. Attorneys for the Biden administration and the states challenging the plan squared off at a federal court hearing last week that left the fate of the loan forgiveness in limbo. Other lawsuits have been filed by an array of conservative groups, as well as Arizona’s attorney general.

A small-business advocacy group has filed a new lawsuit seeking to block the Biden administration’s efforts to forgive student loan debt for tens of millions of Americans — the latest legal challenge to the program, the Associated Press reported. The suit, filed Monday by the Job Creators Network Foundation, argues the Biden administration violated federal procedures by failing to seek public input on the program. It’s one of a handful of lawsuits that have been filed by conservative business groups, attorneys and Republican lawmakers in recent weeks as the Biden administration tries to push forward with its plan to cancel billions in debt before November’s midterm elections. Elaine Parker, president of Job Creators Network Foundation, slammed the program as executive overreach and complained that it does nothing to address the root cause of rising debt: the “outrageous increase in college tuition that outpaces inflation every single year.” The new lawsuit is one of a growing number of legal challenges trying to halt the proposal laid out by President Joe Biden in late August to cancel up to $20,000 in debt for certain borrowers. Six Republican-led states filed suit late last month, accusing the Biden administration of overstepping its executive powers, as did the Pacific Legal Foundation, a Sacramento, California, legal advocacy group. Their lawsuit, filed in federal court in Indiana, calls the plan an illegal overreach that would increase state tax burdens for some Americans who get their debt forgiven. Meanwhile, a federal judge in Wisconsin last week dismissed a lawsuit from a local taxpayers group, the Brown County Taxpayers Association, that sought to block the program, ruling that the group didn’t have standing to bring the lawsuit.

House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) and Rep. David N. Cicilline (D-R.I.), Chair of the Subcommittee on Antitrust, Commercial, and Administrative Law, last week introduced a bill that would give Americans overwhelmed by student loan debt the option of obtaining meaningful bankruptcy relief, according to a press release. The "Student Borrower Bankruptcy Relief Act of 2022" proposes to eliminate the section of the Bankruptcy Code that makes private and federal student loans nondischargeable, allowing these loans to be treated like nearly all other forms of consumer debt. "This legislation updates the federal bankruptcy code to ensure student loan debt is treated like almost every other form of consumer debt that can be discharged during bankruptcy,” said Chairman Nadler. Prospects for consideration in the House are favorable, but overall passage would be challenging given the narrow Democratic majority in the Senate and short amount of time left in the congressional session. Read the full press release.

For the latest legislative developments on bankruptcy and debt, be sure to visit the “Legislative News” section in the ABI Newsroom. 

The Biden administration is gearing up for a major test of the federal government’s bureaucracy: tens of millions of applications for student debt relief, the Wall Street Journal reported. Later this month, the administration will launch the largest student loan forgiveness program in U.S. history. The government and the servicers who manage the federal student loan portfolio will have less than three months to process the initial batch of applications and ensure balances are adjusted before Jan. 1, 2023, when borrowers are due to start making mandatory payments on their loans for the first time in nearly three years. Previous student loan programs have been marked by delays and confusion, such as a loan-forgiveness program for people with public-service jobs that the Biden administration overhauled last year, after the Education Department revealed that only 5,500 borrowers had seen their debt wiped clean since the creation of the program more than a decade ago. Administration officials and Democratic lawmakers acknowledged that a messy rollout of President Biden’s new federal loan-forgiveness program would be a political liability right before the November midterm elections.

The Biden administration was accused in a lawsuit by six Republican-led states of overstepping its authority with a plan to forgive federal student loans, Bloomberg News reported. Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina asked a federal judge on Thursday to immediately block the program before the administration starts the process of canceling loan balances in the coming weeks. President Joe Biden’s plan is based on a 2003 federal law authorizing student-debt forgiveness for individuals serving in the military during a war or living somewhere designated as a “disaster area” by a governmental entity, according to the complaint. The states argue the White House plan isn’t “remotely tailored to address the effects of the pandemic on federal student loan borrowers,” as required by the law. They also cited Biden’s claim in a recent “60 Minutes” interview that “the pandemic is over.” “The Biden Administration’s executive action to cancel student loan debt was not only unconstitutional, it will unfairly burden working class families and those who chose not to take out loans or have paid them off with even more economic woes,” said Missouri Attorney General Eric Schmitt in a statement. “The Biden Administration’s unlawful edict will only worsen inflation at a time when many Americans are struggling to get by.”