566,000 Michiganders approved for student debt relief before plan was blocked

[MLive.com] 566,000 Michiganders approved for student debt relief before plan was blocked

About 864,000 Michiganders applied or were deemed automatically eligible for student loan forgiveness before courts halted the plan last year, new data from the White House shows. And 566,000 of those borrowers were approved for federal debt forgiveness.

But legal challenges mean it could be months before borrowers see relief – if at all.

The U.S. Supreme Court is scheduled to hear oral arguments next month for two lawsuits targeting the student debt forgiveness program. If allowed to move forward, the U.S. Department of Education would forgive $10,000 per eligible student borrower and $20,000 per Pell Grant recipient.

The White House estimates 40 million Americans – including 1.3 million in Michigan – qualify for the program that was rolled out by President Joe Biden last year. A state-by-state breakdown released this week shows 26 million borrowers applied with 16 million being approved before the program was halted.

Top states include California, Florida, New York and Texas.

“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 reportedly told the press.

Related: Student loan forgiveness applications are being approved. What now?

In one lawsuit, six Republican-led states claim the Biden administration overstepped its executive powers and the program threatens their tax revenue. The other was brought by two Texas borrowers – backed by conservative group the Job Creators Network – one who is ineligible for relief and another who doesn’t qualify for $20,000 of forgiveness.

“Our lawsuit intends to block the Biden administration’s student loan bailout, which is an unprecedented executive power grab,” said an October statement from Elaine Parker, President of Job Creators Network Foundation.

The U.S. Department of Education is leaning on the 2003 HEROES Act to provide broad debt forgiveness.

“Millions of those borrowers could be experiencing the benefits of that relief today – were it not for lawsuits brought on by elected officials in some of their own states,” the White House said in a news release.

There are about 1.4 million borrowers in Michigan who hold $51.3 billion in debt.

The vast majority could qualify for debt forgiveness, which is limited to those earning under $125,000 individually and $250,000 for married couples. Roughly 30% of all eligible Michigan borrowers could have their entire debt load erased if the plan survives the legal challenges.

A pause on student loan payments lasts until June 30.

Related: Ann Arbor joins Biden in legal fight to wipe out $400B in student loan debt

The city of Ann Arbor recently signed on to an amicus brief in support of the Biden program.

“It’s something that’s a long time coming,” Ann Arbor Mayor Christopher Taylor said of student loan debt cancellation. “And it’s shocking that it should be opposed in court and elsewhere. I’m delighted that we as a municipality are able to do our small part by signing on to this amicus brief.”

The U.S. Supreme Court is scheduled to hear oral arguments for the two cases on Feb. 28.

More on MLive:

Michigan borrowers roll ‘with the punches’ hoping for student debt relief

5 facts about how much student loan debt Michiganders have

Student loan payments have been frozen for two years. Here’s how the pause helped 6 Michiganders.

Source: MLive.com