WASHINGTON, D. C. – More than 1 million Ohioans are seeking federal student loan debt cancellation under a U.S. Education Department loan forgiveness program that is facing legal hurdles, White House officials announced Friday.
So far, 702,000 of the state’s applicants have been approved to cancel a portion of federally held student debt, according to the White House. But none of those approved applicants has had their debt forgiven yet as federal officials work through legal challenges that have held up the program.
Lawsuits brought by the program’s opponents forced the education department to stop accepting loan discharge applications less than a month after the applications were first released and kept loan servicers from discharging those that were already approved, officials from the education department and National Economic Council told reporters on Thursday.
They said the education department has received more than 26 million loan discharge applications from across the nation and approved more than 16.4 million of them. They estimated some 40 million borrowers are eligible for relief, including more than 1.5 million Ohioans.
So far, they said 1,079,000 Ohioans either applied for relief or were deemed automatically eligible. The program was blocked before all their applications could be reviewed and their information sent to loan servicers, White House officials said, so the more than 300,000 Ohioans whose applications have not yet been approved could still get relief if courts uphold the program.
“We are hopeful that we will prevail in court and when we do, we will quickly discharge debt for those who were approved for relief, process applications that are waiting to be processed, and do the important work of making sure that every eligible individual has a chance to benefit from our one-time debt relief plan,” National Economic Council deputy director Bharat Ramamurti told reporters.
President Joe Biden announced in August that he would cancel up to $20,000 of student loan debt held by the U.S. Department of Education for borrowers who make less than $125,000 per year, or $250,000 for married couples.
He said the program was targeted to “families who need it the most, working and middle-class people hit especially hard during the pandemic.” It fulfilled one of Biden’s 2020 campaign promises, but it was immediately denounced by Ohio Republicans, who questioned its legality and described it as a boon to the wealthy.
“When taking out debt, borrowers understand they are responsible for paying back what they borrowed,” said an August statement from Bowling Green GOP Rep. Bob Latta. “This decision signals to future students who decide to take out student loans that they may never have to pay them back. This irresponsible action is a slap in the face to everyone who has already worked hard to pay off their student loans. Disturbingly, today’s announcement shifts the responsibility of paying off the remaining debt from the student to all American taxpayers, even if they chose not to pursue a college degree.”
The U.S. Supreme Court is scheduled to hear a pair of challenges to the forgiveness program’s legality on Feb. 28. Student loan payments are paused until Supreme Court resolves the case, as is cancellation of any debts.
A November legal brief filed at the U.S. Supreme Court by a group of Republican attorneys general, including Ohio’s Dave Yost, described the loan forgiveness as “executive abuse” and said Biden “is attempting one of the largest wealth transfers in American history.”
“The President has no inherent constitutional authority to forgive student debt,” their brief says. “Accordingly, the loan-forgiveness program is illegal, and blatantly so.”
Under Biden’s plan, the largest amount of loan relief – as much as $20,000 per borrower – would go to students who received Pell Grants, who typically come from families with yearly incomes less than $60,000. A White House fact sheet said Pell Grant recipients can experience more challenges repaying their debt than other borrowers. Borrowers who meet the White House’s income standards but did not get a Pell Grant in college can get up to $10,000 in loan relief.
Education department chief economist Jordan Matsudaira accused those who filed the court challenges of “playing politics with the lives of 26 million borrowers across America,” and said the only reason relief hasn’t reached the “more than 700,000 Ohioans who have been fully approved for relief” is court challenges “from elected officials and special interests.”
If the Supreme Court approves the program, he said nearly 90% of relief will go to borrowers who make under $75,000 a year.
“These are the folks we will be fighting for when we argue for our case before the Supreme Court next month,” said Matsudiara.