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Concern, Uncertainty Evoked from Challenges to Biden’s Debt Relief Program

By Isabelle Nunes, THE DAILY CALIFORNIAN – November 15, 2022

The Biden administration’s student debt relief program has faced legal backlash once again, prompting uncertainty about the status of student loans nationwide.

Challenges following the announcement of the program may slow or complicate the process of loan forgiveness, according to UC Office of the President spokesperson Stett Holbrook. He added that the Biden administration has stopped accepting applications for student loan forgiveness following a federal judge’s condemnation of the program as “unconstitutional.”

A ruling by the U.S. Court of Appeals for the Eighth Circuit further challenged the plan, citing tax concerns as one of the primary reasons for injunction.

“They still had the application open during the first round of challenges, but since the court upheld the latest challenges, they stopped taking applications,” said California Student Loan Servicing ombudsperson Celina Damian. “As of right now, everything is on hold.”

Holbrook noted that despite the Biden administration immediately appealing the decision, it could nonetheless take months to resolve in court.

According to Damian, the program’s facilitators are waiting on the “green light” to continue with the administration of the loan forgiveness program.

If the policy is enacted as initially planned, the UC system estimates that more than 300,000 current university students and alumni will receive some form of loan forgiveness, according to Holbrook.

“UC’s Federal Governmental Relations team is coordinating with campus financial aid offices to ensure current students receive the information necessary to take action toward forgiving some or all of their loan balances,” Holbrook said in an email.

Loan servicers were instructed to hold off on reducing loan accounts for the 16 million student applicants who were already approved, Holbrook noted.

Karine Jean-Pierre, White House press secretary, said in a press release that the administration disagrees with the ruling on the program. She noted that they will “never stop fighting” for Americans in need.

Concerns among potential applicants for the program have also grown as a result of the obstacles.

“I have concerns about the application process shutting down during key moments due to the multiple court orders put against the plan,” said campus freshman Shreyas Venkat in an email. “I was planning to apply for it next year and I do have concerns for its longevity as it has been met with so much backlash.”

Historically, there have been problems with student loan relief initiatives, Damian noted. Such issues include confusion about who is eligible for repayment and a failure to properly manage the programs.

Damian added that there have been reform efforts by the Department of Education to help Californian borrowers in light of the confusion surrounding student loans and payments in general.

“Advocacy organizations, other government (organizations) and state organizations are pushing for not just relief but reform,” Damian said. “It’s a broken system that’s been really hard for borrowers to navigate.”

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