More than 800,000 Arizonans eligible for student loan forgiveness. A lawsuit could block relief




  • In Business
  • 2022-09-30 04:04:13Z
  • By AZCentral | The Arizona Republic

More than nine out of 10 student borrowers in Arizona are expected to benefit from President Joe Biden's student loan forgiveness program, according to data released by the White House, but a lawsuit filed Tuesday has put any hope of debt relief in jeopardy for many across the state.

The Pacific Legal Foundation, a nonprofit organization based in Sacramento, filed suit against the U.S. Department of Education to block a plan unveiled last month by the White House that would cancel $400 billion in student loan debt, citing concerns that Biden's move was illegal and unauthorized. In Arizona, 91% of student borrowers, or 810,800 people, would potentially benefit, per the White House.

The administration's plan would forgive $10,000 of student loan debt only for undergraduate degrees for borrowers who earn less than $125,000 ($250,000 for married couples) annually. Pell Grant recipients qualify to receive an additional $10,000 in debt forgiveness, according to a White House fact sheet.

Biden's program aims to narrow the racial wealth gap and ameliorate the "skyrocketing" federal student loan debt which accumulates to $1.6 trillion for more than 45 million borrowers, while making good on a campaign promise ahead of the Nov. 3 midterm elections.

President Joe Biden speaks about student loan debt forgiveness on Aug.
President Joe Biden speaks about student loan debt forgiveness on Aug.  

About 810,800 Arizonans are qualified to receive relief from Biden's debt forgiveness plan, including 554,900 Pell Grant recipients, according to White House state-by-state estimates.

In Arizona, approximately 886,000 past and current school-goers hold $31.7 billion in student loan debt as of June 30, according to Federal Student Aid data released this month, and borrowers in the state average $35,779 in student debt.

Vannah Caumeran, a recent college graduate and receptionist for assessment intake at a behavioral health center in Gilbert, felt relief when she heard that a third of her student loan debt she accumulated while attending Northern Arizona University would be forgiven under Biden's plan.

"I was really, really happy," Caumeran said after she learned she qualified for $10,000 in student debt relief. Money that would otherwise be spent paying off her student debt, will now go toward building up a savings and purchasing a new car, she said.

Of the 40 million borrowers qualified to receive student debt relief, 90% of recipients earn less than $75,000 a year. But Pell Grant recipients, of which 71% are black and 65% are Latino, stand to benefit the most from Biden's loan forgiveness program.

Pell Grant recipients make up 60% of the borrower population, according to the Biden administration, and 94% of those borrowers come from families with incomes of $60,000 or less.

Student loan forgiveness: What Arizonans need to know, including who qualifies and how to apply

Despite praise that working- and middle-class borrowers across the nation could see permanent debt relief, including many Arizona borrowers, GOP leaders across the state continue to push back against Biden's plan.

Rep. Andy Biggs, R-Ariz., condemned Biden's student loan forgiveness plan as unfair, tweeting that "Middle-class Arizonans shouldn't be forced to pay for coastal elites' gender studies master's degrees."

But Rep. Debbie Lesko, R-Ariz., took her disapproval a step further and wrote on Twitter the day Biden announced his program that she would co-sponsor legislation with Rep. Drew Ferguson, R-Ga.. Ferguson's legislation would prohibit Biden from cancelling any student loan debt. However, Lesko so far is not listed as a co-sponsor of Ferguson's bill.

In addition to debt forgiveness, Biden's plan paused student loan repayments once more until January 2023, caps monthly payments to 5% of a borrower's income and provides credit toward loan forgiveness for certain borrowers.

The White House repeatedly has told borrowers that information on how to apply for the Biden's student debt relief plan will Images be provided by the Department of Education in the coming weeks. But whether the administration will be able to roll out their agenda on time, or at all, remains to be decided by the U.S. District Court for the Southern District of Indiana.

Frank Garrison, an attorney for the Pacific Legal Foundation and plaintiff in the case against the department of education, has asked the court to file a temporary restraining order against any form of Biden's loan cancellation from going into effect pending ongoing litigation.

Lawyers representing Garrison argue that Biden sidestepped Congress when his administration announced a plan to forgive a large swath of student loan debt - criticized as "an election year ploy" - and that the Department of Education's justification to provide relief relies on an "inapplicable, 20-year-old law." That law, known as the HEROES Act, permits the Secretary of Education to cancel student loan debt in national emergencies, such as the COVID-19 pandemic, according to an August memorandum written for the Education Department.

"It's flagrantly illegal for the executive branch to create a $500 billion program by press release, and without statutory authority or even the basic notice and comment procedure for new regulations," Caleb Kruckenberg, an attorney at Pacific Legal Foundation, said Tuesday in a written statement.

This article originally appeared on Arizona Republic: Lawsuit could block Arizonans eligible for student loan forgiveness

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