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Understanding the lawsuits slowing down student loan forgiveness

The application is currently paused because of court orders blocking the student debt relief program.

INDIANAPOLIS — Student loan debt relief: "blocked."

That's the message borrowers see if they try to apply for the federal one-time cancellation.

LINK: One-time Federal Student Loan Debt Relief | Federal Student Aid

One-time forgiveness is the program offering up to $20,000 in loan cancellation for people making up to a certain amount of money.

RELATED: Which student loan forgiveness program is right for me?

The application is paused because of court orders blocking the student debt relief program.

The lawsuits

On Thursday, Nov. 10, a federal judge in Texas ruled President Joe Biden's one-time forgiveness deal is illegal. 

RELATED: What student loan borrowers need to know after judge strikes down Biden plan

However, that ruling does not mean it's "case closed."

"The White House has already filed an appeal with the 5th Circuit Court, so it will be up to that court to decide," NerdWallet's Anna Helhoski said. "And now, at that point, whatever the ruling is, I think it's a very safe assumption that one side or the other is probably going to appeal again, and that will head to Justice Alito at the Supreme Court."

Right now, there are five lawsuits fighting student loan forgiveness.  

Of the five lawsuits, the 5th Circuit suit is one of two that pose a threat to the program sooner rather than later.

The second suit is in the 8th Circuit Court. That suit, brought by six states, is the reason the government isn't taking applications currently. 

"The timeline for all of this is really unclear, and that puts borrowers in a really challenging position that they just have to wait and see," Helhoski said.

What moves a lawsuit forward?

When a lawsuit is filed, there are two big parts needed for it to move forward.

Brad Desnoyer, clinical professor of law at Indiana University, said part one is standing. Can the person or group suing prove harm?

"In order to sue, you have to have a traceable, cognizable injury. So, if you were in a car accident, I couldn't sue on your behalf. It's not my injury," Desnoyer said. 

In this case, are the people or groups challenging Biden's plan actually harmed by the student loan forgiveness? 

The second hurdle to clear, or prove, is substance.

Does Biden have the authority to cancel debt? The people, or states suing, say "no."

The White House says "yes" because of the HEROES Act of 2003, which was created after the 9/11 attacks. 

"Part of that is that the president has the authority to forgive student loans when there's an emergency. And the Biden administration's argument is that the emergency is COVID-19," Desnoyer said. 

What can borrowers do now? 

Experts agree that borrowers should be prepared to make loan payments starting Jan. 1, 2023.

If you requested a COVID-19 loan payment refund, don't touch that money yet.

LINK: Student loan refund checks are arriving, but don't spend yet - NerdWallet

Also, make sure your are signed up for student loan alerts.

RELATED: Student loan forgiveness application no longer available after court decision

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