EXPLAINER: Where does the student loan debt plan stand?

President Joe Biden’s plan to provide millions of borrowers with up to $20,000 apiece in federal student-loan forgiveness has been blocked by a second federal court, leaving millions of borrowers to wonder if they'll get debt relief at all.

On Thursday, U.S. District Judge Mark Pittman ruled that the program usurped Congress’ power to make laws. The administration immediately filed a notice to appeal.

It's not the only challenge the plan faces. Last month, the 8th U.S. Circuit Court of Appeals in St. Louis put loan forgiveness on temporary hold while it considers a challenge from six Republican-led states.

The fate of the plan will likely eventually end up in the Supreme Court, meaning a final decision is a ways off.

Here's where things currently stand:

HOW THE FORGIVENESS PLAN WORKS

The debt forgiveness plan announced in August would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would get an additional $10,000 in debt forgiven.

Current college students qualify if their loans were disbursed before July 1. The plan makes 43 million borrowers eligible for some debt forgiveness, with 20 million who could get their debt erased entirely, according to the administration.

The Congressional Budget Office has said the program will cost about $400 billion over the next three decades.

THE POLITICAL FALLOUT

The program immediately became a major political issue ahead of the November midterm elections. Republican lawmakers and other conservatives called it an unfair government giveaway for relatively affluent people at the expense of taxpayers who didn’t pursue higher education.

Biden responded by calling critics' outrage “wrong” and "hypocritical.” He noted that some Republican officials had their own debt and pandemic relief loans forgiven. Still, many Democratic lawmakers facing tough reelection contests distanced themselves from the plan.

THE TEXAS CASE

Pittman — an appointee of former President Donald Trump based in Fort Worth, Texas — made it clear that he felt Biden overstepped his authority. He said the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act, did not provide the authorization for the loan forgiveness program that the administration claimed it did.

The law allows the secretary of education to waive or modify terms of federal student loans in times of war or national emergency. The administration claimed the COVID-19 pandemic created a national emergency.

But Pittman said such a massive program required clear congressional authorization.

White House Press Secretary Karine Jean-Pierre said in a statement that the president and his administration “are determined to help working and middle-class Americans get back on their feet.”

THE PLAN FACES MANY OTHER LEGAL CHALLENGES

In September, the Republican-led states of Nebraska, Iowa, Kansas, Missouri, Arkansas and South Carolina filed suit to halt the program, arguing that the pandemic no longer qualifies as a national emergency. But Justice Department attorney Brian Netter told U.S. District Judge Henry Autrey in October that student loan defaults have skyrocketed over the past 2 1/2 years.

Autrey ruled on Oct. 20 that the states lacked standing, allowing the forgiveness plan to proceed. But the 8th Circuit temporarily halted it the next day while it considers a permanent block. That decision is still pending.

The White House encouraged borrowers to continue applying for relief, saying the court order did not prevent applications or the review of applications.

The plan has faced several other legal challenges. In October, Supreme Court Justice Amy Coney Barrett rejected an appeal from a Wisconsin taxpayers group. A federal judge had earlier dismissed the group’s lawsuit, finding they didn’t have the legal right, or standing, to bring the case.

THE TEXAS RULING WAS A BIGGER BLOW TO THE PLAN

Pittman’s decision strikes down the underlying legal argument used to justify Biden’s plan. Previously, the White House has been able to dodge legal attacks made in lawsuits by tweaking details of the program.

One lawsuit argued that the automatic debt cancellation would leave borrowers paying heavier taxes in states that impose a tax on canceled debt. The administration responded by allowing borrowers to opt out. Another suit alleged that Biden’s plan would hurt financial institutions that earn revenue on certain kinds of federal student loans. The White House responded by carving those loans out of the plan.

The new ruling, however, argues that the HEROES Act does not grant authority for mass debt cancellation. The law grants the Education Department wide flexibility during national emergencies, but the judge ruled that it’s unclear whether debt cancellation was a necessary response to COVID-19, noting that Biden recently declared the pandemic over.

SUPREME COURT-BOUND?

The legal situation is complicated because of the numerous lawsuits. It's likely that the Texas case and the lawsuit filed by the six states will be appealed to the Supreme Court. Before it reaches that level, the 5th and 8th Circuit appeals courts — both dominated by conservative judges — will rule separately in each case.

The case before the 8th Circuit could end up in the Supreme Court soon, since the six Republican-led states have asked the appeals court to keep the program on hold while the case plays out. If the appeals court grants that request, the administration will likely ask the Supreme Court to intervene. The states also could go to the high court if their request is denied.

Likewise, the administration has signaled it will appeal the Texas ruling. If the 5th U.S. Circuit Court of Appeals is asked to block Pittman’s ruling pending appeal, the losing side could then turn to the Supreme Court.

In either case, appellate courts would not issue a final ruling on the validity of the program, but on whether it can go forward while challenges proceed.

At the same time, emergency orders can signal how courts will ultimately decide a case. In January, the Supreme Court consolidated challenges to the administration’s authority to impose a vaccine-or-testing requirement on the nation’s large employers. A few days after hearing arguments, the court split 6-3 to block the requirement, saying the challengers were likely to prevail in the end. A separate vaccine mandate for most health care workers was allowed to proceed when the court concluded that a challenge to it was likely to fail.

COMMON SEARCH: ‘IS STUDENT LOAN FORGIVENESS CANCELED?’

Borrowers are confused about whether their debt will be canceled or they'll have to resume making payments on Jan. 1, when a pause prompted by the COVID-19 pandemic is set to expire.

After the Texas judge’s ruling Thursday night, borrowers hit the internet, asking Google: “Is student loan forgiveness canceled?” according to Google Trends. Overall search traffic for “student loan forgiveness” quadrupled Thursday night and had increased nearly tenfold by Friday morning, according to Google Trends data.

Brenna Zimmerman, who graduated from Kansas State University in 2021 with about $30,000 in debt, said she wasn’t surprised the program was blocked.

“I don’t think I was really serious that it would kind of ever come to fruition,” said the 24-year-old graphics coordinator at a packaging company. She called the debt forgiveness “a little bit too good to be true. Kind of more of a political stunt than anything that would actually ever happen.”

Though the program would benefit her, Zimmerman wondered if it was a good idea.

“I think I’d be a fool not to apply, but I also I don’t know. I don’t think it’s necessarily fair, especially to people who chose not to go to school,” Zimmerman said.

“This is devastating,” said Melissa Byrnes, an organizer and advocate for student debt cancellation who is a defaulted federal loan borrower. “I’m devastated for borrowers. What has happened is the wealthy don’t want struggling students, low- and middle-class communities to be able to benefit and share in the wealth these systems have created for them.”

The White House said 26 million people have applied for debt relief, and 16 million people had already had their relief approved. The Department of Education would “quickly process their relief once we prevail in court,” she said.

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AP journalists Mark Sherman and Collin Binkley in Washington; Gene Johnson in Seattle; Heather Hollingsworth in Mission, Kansas; Chrissie Thompson in Spokane, Washington; and Cheyanne Mumphrey in Phoenix contributed to this report.