Editor's Note: The answer is yes. On November 22, 2023, the Biden Administration announced that the student loan moratorium will continue through 60 days after June 30, 2023 or 60 days after either the U.S. Department of Education can resume implementation of the student loan forgiveness program or the lawsuits seeking to block the program reach a conclusion, whichever comes first. As such, dates have been updated to reflect this change.
The student loan pause is currently set to expire sometime in 2023, depending on the status of litigation.
But pending lawsuits may delay implementation of the President’s student loan forgiveness plan.
Will this cause the student loan payment pause and interest waiver be extended again, for an eighth time, while the lawsuits are still pending?
Here's a breakdown of the outstanding issues right now.
Payment Pause Update
The U.S. Department of Education announced an eighth extension to the payment pause and interest waiver on November 22, 2022 (two days after the original publication of this article).
The student loan moratorium will continue through 60 days after June 30, 2023 or 60 days after either the U.S. Department of Education can resume implementation of the student loan forgiveness program or the lawsuits seeking to block the program reach a conclusion, whichever comes first.
Outstanding Lawsuits Against Biden's Student Loan Forgiveness Program
Six plaintiffs have filed lawsuits against the Biden Administration, seeking to block the President’s student loan forgiveness plan. But, before these cases can be considered on the merits, the plaintiffs must establish that they have legal standing to file the lawsuits.
To establish legal standing, the plaintiffs must demonstrate that they are or will be harmed by the President’s plan. This demonstration must be direct and definite, not speculative and tenuous.
If any of these cases can be considered on the merits, they are more likely than not to demonstrate that the President lacks the legal authority to establish a new, broad student loan forgiveness program without explicit authorization by Congress. However, demonstrating that they have legal standing to bring the lawsuits is a significant and perhaps insurmountable barrier.
Status Of The Lawsuits
To date, a total of six lawsuits have been filed against the President’s student loan forgiveness plan:
- Two lawsuits have been blocked because of a lack of legal standing. These lawsuits were dismissed upon appeal, and the U.S. Supreme Court let the lower courts’ dismissal stand.
- A third lawsuit was also blocked because of a lack of legal standing. However, the 8th Circuit Court of Appeals granted a preliminary injunction against the President’s plan while the court considers the appeal. The U.S. Department of Education has appealed this temporary injunction to the U.S. Supreme Court.
- A fourth lawsuit ruled that the plaintiffs have legal standing and decided the case on the merits, finding that the President’s plan is unconstitutional and vacating the program. This case has been appealed by the U.S. Department of Education to the 5th Circuit Court of Appeals.
- Two additional cases are still pending.
Thus, one lawsuit has temporarily suspended the President’s plan and the other has terminated the program. Both of these lawsuits are being appealed.
Depending on how long the appeals process takes, the President’s plan may be delayed beyond December 31, 2022, raising the possibility of an additional extension to the payment pause and interest waiver.
Litigation Timeline
On August 24, 2022, President Biden announced his broad student loan forgiveness plan and a “final student loan pause extension.”
On September 27, 2022, the Pacific Legal Foundation was the first to file a lawsuit against the President’s student loan forgiveness plan. They were also the first case to be dismissed, on September 29, 2022, due to a lack of legal standing, after the U.S. Department of Education clarified that borrowers can choose to opt out of the President’s plan. They ultimately filed an emergency application to the U.S. Supreme Court, which declined to hear the case on November 4, 2022. [Status: Dismissed.]
On September 29, 2022, six state Attorneys General, for Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina, filed a lawsuit in the U.S. District Court for the Eastern District of Missouri, Eastern Division, to block the President’s plan. These states hold or service loans in the Federal Family Education Loan Program (FFELP) and would lose revenue if borrowers could consolidate their FFELP loans into the Direct Loan program to qualify for forgiveness. The U.S. Department of Education responded by limiting FFELP borrower eligibility for forgiveness to just those borrowers who applied for a Federal Direct Consolidation Loan before September 29, 2022, undermining the states’ claims to legal standing. The court dismissed the lawsuit on October 20, 2022 because the states lacked legal standing to bring the lawsuit. [Status: Dismissed. Appeal pending.]
On September 29, 2022, the Arizona Attorney General filed a lawsuit to block the President’s student loan forgiveness plan, arguing that it interferes with the effectiveness of Public Service Loan Forgiveness as a recruiting and retention tool. [Status: Still pending.]
On October 4, 2022, the Wisconsin Institute for Law & Liberty filed a lawsuit against the President’s plan on behalf of the Brown County Taxpayers Association. The case was dismissed on October 6, 2022, due to a lack of legal standing. They ultimately filed an emergency application to the U.S. Supreme Court, which declined to hear the case on October 20, 2022. [Status: Dismissed.]
On October 10, 2022, the Job Creators Network filed a lawsuit in the U.S. District Court for the Northern District of Texas, Fort Worth Division, to block the President’s plan. The plaintiffs included a borrower whose FFELP loans do not qualify for forgiveness and a borrower who did not qualify for $20,000 in student loan forgiveness because they did not receive a Federal Pell Grant in college. The lawsuit argues that the U.S. Department of Education violated the notice-and-comment provisions of the Administrative Procedures Act (APA), even though the Heroes Act of 2003 waives those provisions. The court ruled on November 10, 2022 that the program violates the U.S. Constitution and the court vacated the program. [Status: Ruling in favor of plaintiffs. Appeal pending.]
The U.S. Department of Education launched a beta version of the student loan forgiveness application on October 14, 2022 and the full application on October 17, 2022.
On October 18, 2022, the Cato Institute filed a lawsuit to block the President’s student loan forgiveness plan, arguing that it interferes with the effectiveness of Public Service Loan Forgiveness as a recruiting and retention tool. This is the only lawsuit to have been filed after the President’s plan was fully “ripe.” It is similar to the lawsuit by the Arizona Attorney General. [Status: Still pending.]
On October 20, 2022, the lawsuit by the six state Attorneys General was dismissed for lack of standing. They immediately appealed the decision to the 8th Circuit Court of Appeals.
On October 21, 2022, the 8th Circuit Court of Appeals granted a temporary stay in the six state Attorneys General case until the court is able to issue a ruling in the case. The court said that the U.S. Department of Education could continue the payment pause while the case is pending. The court’s stay does not preclude borrowers from continuing to apply for forgiveness.
On November 4, 2022, the U.S. Department of Education announced that it had received a total of 26 million applications and had approved 16 million of them so far. The loan servicers have 15 days after they are notified by the U.S. Department of Education to apply the forgiveness to the borrowers’ accounts. But, this is on hold due to the October 21, 2022 stay in the six state Attorneys General case and a subsequent ruling in the Job Creators Network lawsuit.
On November 10, 2022, the U.S. District Court for the Northern District of Texas, Fort Worth Division ruled in the Job Creators Network lawsuit, finding that the President’s student loan forgiveness plan is unlawful and vacating the program. The ruling is unusual in that it merged the legal standing and merits phases of the litigation, and used circular reasoning to establish legal standing. The U.S. Department of Education is appealing the decision. In the meantime, the U.S. Department of Education has taken down the forgiveness application form and replaced it with a notice that they are holding onto the applications submitted so far, pending an appeal.
On November 14, 2022, the U.S. District Court for the Eastern District of Missouri, Eastern Division, granted a preliminary injunction in the six state Attorneys General case pending appeal. The U.S. Department of Education has appealed this decision to the U.S. Supreme Court.
On November 15, 2022, the U.S. Department of Education asked the Texas court for a stay of their judgment in the Job Creators Network lawsuit, pending appeal.
On November 17, 2022, the U.S. Department of Education appealed the Texas court’s decision in the Job Creators Network lawsuit to the U.S. Court of Appeals for the 5th Circuit.
On November 18, 2022, the U.S. Department of Education appealed the preliminary injunction in the six state Attorneys General lawsuit to the U.S. Supreme Court.
As you can see, the existing litigation has already delayed implementation of Biden's loan forgiveness plan by at least two months since the first lawsuit was filed, and it could be surmised that both the current litigation and future lawsuits may delay things further.
Will The Student Loan Pause Be Extended Further?
There are multiple factors that make it appear that the student loan payment pause may be extended further.
First, the lawsuits from the six state Attorneys General and Job Creators Network have put the President’s student loan forgiveness plan on hold, pending the results of the U.S. Department of Education’s appeals.
Appeals take six months on average, typically requiring 30 days for a filing by the plaintiff, 30 days for a response by the defendant, and 21 days for a rebuttal. That alone might delay rulings on the appeals until sometime in 2023. However, the judges have been pursuing these cases expeditiously, opening up the possibility that they will be resolved before the end of the year.
If the cases are still pending at the end of the year, the Biden Administration is likely to further extend the payment pause and interest waiver for an eighth time. If the Biden Administration loses their appeal, they might choose to extend the payment pause and interest waiver for the duration of the President’s tenure in office as an alternative to forgiveness.
Second, the President recently extended the Covid-19 State of Emergency through January 11, 2023. The Biden Administration relies on the Heroes Act of 2003 to extend the payment pause and interest waiver so long as the national emergency declaration is still in effect.
On September 18, 2022, President Biden told 60 Minutes, “The pandemic is over. We still have a problem with COVID. We’re still doing a lot of work on it. But the pandemic is over.” But, the President has not rescinded the national emergency declaration, so it is still in effect. A shifting of the status of Covid-19 from pandemic to endemic doesn’t necessarily mean that the national emergency is over. The national emergency declaration has been renewed every 90 days since March 2020.
However, on November 15, 2022, the U.S. Senate passed a joint resolution, S.J. RES. 63, to end the national emergency declaration by a vote of 62 to 36, with 2 Senators not voting. The U.S. House of Representatives has not yet voted on the joint resolution. Although only a simple majority is needed to pass the joint resolution, the President can veto the joint resolution, in which case a two-thirds majority will be required to override the veto.
Finally, the U.S. Department of Education could also use this time to issue new regulations for income contingent repayment to transform it into a means-tested student loan forgiveness plan. The final rule would have to be published in the Federal Register by November 1, 2023 for the regulations to go into effect on July 1, 2024. The Biden Administration could continue the payment pause and interest waiver until the new regulations become effective.
Related: Can The President Extend The Student Loan Payment Pause Forever?
When Could Borrowers Expect To See An Announcement About The Payment Pause Extension?
If the Biden Administration does implement an eighth extension to the payment pause and interest waiver, they are likely to announce the extension at the last minute to underscore the potential harm to borrowers from a failure to decide the cases in their favor. Consider also that the seventh extension was announced only seven days before the payment pause and interest waiver was set to expire.
If the U.S. Department of Education implements an eighth extension to the payment pause and interest waiver, it will be the federal agency that has cried wolf twice. The fifth and seventh extensions were both identified as the “final extension.” Will borrowers believe them when they really do restart repayment of federal student loans?
On the other hand, the President’s student loan forgiveness plan may have solved one problem with the restart of repayment. As many as one-third of borrowers may have moved during the pandemic, increasing the likelihood of delinquency when repayment restarts.
However, the student loan forgiveness application collected current telephone numbers and email addresses from more than 26 million borrowers. This could help making restarting payments much less risky in terms of contacting borrowers to ensure they don't fall into delinquency or default.
Mark Kantrowitz is an expert on student financial aid, scholarships, 529 plans, and student loans. He has been quoted in more than 10,000 newspaper and magazine articles about college admissions and financial aid. Mark has written for the New York Times, Wall Street Journal, Washington Post, Reuters, U.S. News & World Report, MarketWatch, Money Magazine, Forbes, Newsweek, and Time. You can find his work on Student Aid Policy here.
Mark is the author of five bestselling books about scholarships and financial aid and holds seven patents. Mark serves on the editorial board of the Journal of Student Financial Aid, the editorial advisory board of Bottom Line/Personal, and is a member of the board of trustees of the Center for Excellence in Education. He previously served as a member of the board of directors of the National Scholarship Providers Association. Mark has two Bachelor’s degrees in mathematics and philosophy from the Massachusetts Institute of Technology (MIT) and a Master’s degree in computer science from Carnegie Mellon University (CMU).
Editor: Robert Farrington