Metro Detroiters respond to court order blocking student debt forgiveness

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Posted at 12:25 PM, Nov 13, 2022
and last updated 2022-11-13 15:52:35-05

If you’ve applied for student loan relief recently on, you’ve probably seen a memo stating the program is blocked right now due to recent court orders. In light of the most recent court ruling by a federal judge in Texas, the program is no longer taking applications.

“This court decision is really quite significant because it ordered the administration to halt the whole process,” said Jonathan Hanson, lecturer at the Ford School of Public Policy at the University of Michigan.

A previous injunction in October didn’t stop the program from taking applications. Some 26 million applications have been received to date.

"For now everyone who’s applied for loan forgiveness has to wait for this process to unfold," Hanson said.

The 8th U.S. Circuit Court of Appeals had already temporarily blocked the forgiveness plan while it considered a suit brought by the six states; Nebraska, Missouri, Iowa, Kansas, Arkansas and South Carolina, to block the program.

White House Press Secretary Karine Jean-Pierre said the administration disagreed with Thursday’s ruling in Texas and the Department of Justice had filed an appeal.

All told, it's a process likely to take months, and some legal experts believe it could even make its way to the Supreme Court.

From a policy perspective, Hanson said the program's effort is significant; even if it ultimately isn't allowed to proceed. This sort of debt clearance at this magnitude would be a landmark.

"Student debt is an enormous problem that is making many people's lives very difficult. They can't seem to get out from under it," he said, noting that young voters have felt disillusioned with their economic outlook for some time.

“They don’t feel like the opportunities that were available to earlier generations have been available to them. It’s very difficult to get started, establish a family, buy a home," he said. "This was a sign of hope. That this thing one piece of their financial lives might be made less burdensome.”

Under a pandemic-era policy, student borrowers through the government's direct loan program have had their payments delayed until January. 2023

Samer Dubaisi and his wife Sara Shaban are two of the millions of Americans currently waiting to see if they'll actually have any of their student loans eliminated.

Both applied for federal student loan forgiveness as soon as the program opened this fall.

“She’s at 30k right now. So that’s over 30 percent that would be eliminated,” said Samer Dubaisi of his wife's student debt.

Neither one of them has heard back regarding their application status, and now they don't expect to for a while.

The Dearborn couple recently married and they’re both in medical school. When the program was announced — it was game changer.

“It was something that I thought was very humane for the government to do. It was like they were understanding the situations citizens were being put in right now,” Shaban told Action News.

Now, they’re both frustrated with what feels to them like serious back tracking.

“For this to happen after applications have been sent in, 26 million of them so far. I think it kind of shows a lack of communication,” Dubaisi said.

If allowed to move forward, the program would allow most borrowers to eliminate $10,000 in student loans. For borrowers who received a Pell Grant during their education, they'd be eligible for $20,000 in debt clearance.

The federal judge in Texas has ruled the Biden administration is overstepping its authority. Attorneys for the administration argue Congress gave the Secretary of Education the power to wipe student debt clean in 2003 under the “Heroes Act."

For borrowers like Samer and Sara, it's a waiting game. One that's likely to take months as this makes its way through the court system.