The Legal Fight for Student Debt Forgiveness Is Underway

Sam Schwab  

Associate Editor 

Loyola University Chicago School of Law, JD 2024 


In August, President Joe Biden announced that his administration would be implementing a one-time student loan debt relief program for Americans with student loan debt. Since the announcement, the administration has posted guidance on the Department of Education’s website that explains the plan in detail and attempts to answer some FAQs. The website outlining the plan states that $10,000 worth of debt would be forgiven for Americans making less than $125,000 a year who have outstanding federal student loans. For those who received Pell Grants to pay for college, up to $20,000 worth of student loan debt would be forgiven. The website states that “the Administration will launch a simple application in October” that must be completed by the end of the year to determine whether borrowers qualify for debt forgiveness. That application is now available on the Federal Student Aid website.  

The President’s authority to enact debt forgiveness  

In his announcement, the President said that he was acting with “the authority Congress granted the Department of Education.” According to a legal opinion given by the Department of Justice, the authority that President was referring to is known as the HEROES Act, which President George Bush signed after 9/11 to “alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies.” The national emergency under which President Biden now enacts student debt relief is the COVID-19 pandemic. In recent weeks, at least three lawsuits have challenged the proposal, in part on the basis that Congress never intended to grant President Biden the authority to regulate student loan debt under these circumstances. During the Trump administration, however, the Department of Education moved to freeze student loan payments and interest accruals in response to the pandemic, and the Biden administration rightly pointed that no such lawsuits were filed against the Trump administration. Nevertheless, the current Administration has adjusted its plan in response to legal attacks from conservatives.  

Lawsuit from six Republican attorneys general  

The first lawsuit was filed by the Republican attorneys general of Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina. The lawsuit centers around Federal Family Education Loans (FFEL) and Perkins loans – both of which are serviced by private banks and ensured by the Federal government. The lawsuit alleges that the Biden plan, which it refers to as “Mass Debt Cancellation” over 80 times in the complaint, harms the individual states because the plan would hurt the private loan servicers whom the states have authorized to service the Perkins and FFEL loans. For example, Missouri is home to MOHELA, which stands for “Missouri Higher Education Loan Authority.” MOHELA is created by Missouri statute to service FFEL and Perkins loans and is one of the largest student loan servicers in the United States.  

When the debt forgiveness plan was first announced, the U.S. Department of Education’s website said that FFEL and Perkins loan borrowers were eligible for debt relief if they consolidated their loans into Direct Loans serviced by the U.S. Department of Education. The Department has since directly changed this language on its website. Under the FAQ question “Are Federal Family Education Loan (FFEL) Program loans or Perkins Loans eligible for debt relief?,” the answer now states that “As of Sept. 29, 2022, borrowers with federal student loans not held by [the Department of Education] cannot obtain one-time debt relief by consolidating those loans into Direct Loans.” It is estimated that this change will now exclude “roughly 800,000 borrowers” from obtaining student debt relief.  While it is not clear that the lawsuit has caused the administration to change course in this way, a statement provided by the administration to NPR suggests that it may not consider canceling FFEL and Perkins loan debt as a “legally available option.”  

Other lawsuits and resources for borrowers 

Two other lawsuits have been filed against the plan – one by the Arizona Attorney General, and another by a taxpayer from Indiana. Each of these lawsuits may come down to whether the parties suing have “standing.” “Standing” is a court’s determination that the person who is suing has been harmed in a concrete way. If the court finds that the party suing has been harmed in a concrete way, then the courts are allowed to step in. As the Arizona Attorney General has conceded, standing, while not a complete barrier, is in fact a “major hurdle.”  

In closing, while the administration is certainly proceeding with its plan to forgive student loan debt, it appears as though its efforts may be watered down by various conservative lawsuits. It is no secret that conservatives have long opposed student debt forgiveness. However, the fact that conservatives did not so strongly oppose President Trump’s freeze on tuition payments and other assistance to borrowers appears to show that their attacks on the Biden administration’s efforts are out of partisan reaction and spite. 

If you yourself are attempting to have your student loan debt forgiven, check the Federal Student Aid website for the information. For more resources pertaining to student loan debt forgiveness, you can visit the Department of Education’s online one-pager on the plan