(USNewsMag.com) – A second lawsuit regarding the Biden administration’s pause for federal student loan payments was filed at the beginning of April.
The lawsuit was filed by the New Civil Liberties Alliance for the free market think tank, the Mackinac Center for Public Policy in the U.S. District Court for the Eastern District of Michigan.
The lawsuit argues that the pause has unlawfully been extended by the Department of Education. The lawsuit alleges nonprofit employers such as the Mackinac Center for Public Policy are harmed by the pause as the nonprofit normally recruits employees using a federal debt relief program for nonprofit workers called the Public Service Loan Forgiveness program. The pause reduces the program’s incentives provided to borrowers who work for nonprofits, according to the lawsuit.
The plaintiffs are seeking the immediate end to the pause in payments that first went into effect in March 2020 due to the pandemic. For more than three years payments and interest have been paused. Under both the Trump administration and the Biden administration the pause in payments has been extended eight times.
The pause and proposed student loan debt forgiveness program announced in November by President Joe Biden are legal, according to the Department of Education.
Under the proposed student loan forgiveness plan, borrowers earning less than $125,000 or $250,000 filing jointly are eligible for $10,000 in loan forgiveness or up to $20,000 if the loan is a federal Pell grant.
The student loan forgiveness program challenge was heard at the end of February by the Supreme Court. The ruling is expected to be delivered before July. The pause is set to end in August or 60 days after the Supreme Court ruling, whichever comes first.
In March, SoFi, a private bank that refinances student loans, sued the Biden administration to seek an immediate end to the pause in student loan payments.
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