The headline seems a bit misleading. They’re just moving the lawsuit to another venue. States are arguing that forgiving student loans will affect taxes which is bologna because student loans have nothing to do with taxes.
I mean, freeing up money from the payments I could see having the effect if allowing states to bring in more from sales taxes for stuff that folks could then afford to buy, or property taxes maybe for better housing.
It’s completely misleading, to me. As someone with a laughably high student loan balance, my livelihood depends on the outcome of these disingenuous court cases. When I saw this headline, my heart skipped a beat with excitement. But nope, this will only be resolved when there is a final judicial ruling (probably from the Supreme Court, eventually), and this was not that.
Actually, it’s not about taxes per se, but state revenue,
The states argued that implementation of mass student loan forgiveness would harm state finances, in part because state-related servicers (such as Missouri-based MOHELA) would lose revenues, and those lost revenues would in turn impact state treasuries. Missouri and other states made similar arguments in the legal challenge to Biden’s first debt relief plan.
Forgiven loans and cancelled loans do indeed cause lost revenue for servicers (since the servicing ends early), so unfortunately this is a legitimate argument. And this this is a state owned company, the lost revenue would have gone into state coffers, so…
It’s also a bit bunk as folks winning the lottery and paying off their loans in full early - which they are fully entitled to do - causes the same lost revenue scenario. It’s also easy to see a technical fix here (Congress passes an updated law giving Biden and the Department of Ed. to pay back the servicers the potential lost fees and such on each forgiven balance, and then the argument goes away. Instead of backing this, though, they want to punish the student borrowers instead.)
What’s the process for if the new venue doesn’t issue a stay, but the final outcome is that they strike down the relief? (I’m really asking.) My payments start back up, and then a month later they double or triple based on the outcome of the case? I just assumed the new venue would stay the relief from going into effect before making a ruling, but you’ve made me nervous.
You’ve actually stated one of the main reasons that TROs are issued. One of the required showings by the petitioning party is to demonstrate “imminent” and “irreparable harm.” In this case the imminent is shown by the plan’s policies and planned implementation as well as the fact that there was a date promulgated for commencement. Irreparable harm would be demonstrated by something similar to your scenario – the petitioner would argue that if it goes into effect and the final determination is that it should not have been permitted to go into effect, that monies which should have been rightfully collected are forever lost, absent an otherwise unnecessary affirmative and costly process of collecting on the marginal difference of payments owed.
To more directly answer your question, the court would direct the companies to collect in a manner which is least onerous to both parties (debtor and creditor); likely a long period of increased collections or (IMHO, more likely) extending the payment period to collect the now-again additional amount due.
I agree with you though, I think given the circumstances and gravity to individual debtors in this case the prudent thing is to stay implementation of the program.
Thank you, a great explanation. The whole situation makes me feel like a rag doll being tossed around the courts. Do I start repaying now? No? Tell me when….Now? No? False alarm. Okay, how about now? I want the relief, but at this point I’d take any decision so I can just make a freaking budget that I can stick to.
Happy to help! And, I totally feel you on the ragdoll thing. I’ve got a lot of dollars in loans in repayment from law school and it would be nice to just be able to work on a budget that I knew wasn’t going to change drastically in a few months (again).
The headline seems a bit misleading. They’re just moving the lawsuit to another venue. States are arguing that forgiving student loans will affect taxes which is bologna because student loans have nothing to do with taxes.
I mean, freeing up money from the payments I could see having the effect if allowing states to bring in more from sales taxes for stuff that folks could then afford to buy, or property taxes maybe for better housing.
It’s completely misleading, to me. As someone with a laughably high student loan balance, my livelihood depends on the outcome of these disingenuous court cases. When I saw this headline, my heart skipped a beat with excitement. But nope, this will only be resolved when there is a final judicial ruling (probably from the Supreme Court, eventually), and this was not that.
Actually, it’s not about taxes per se, but state revenue,
Forgiven loans and cancelled loans do indeed cause lost revenue for servicers (since the servicing ends early), so unfortunately this is a legitimate argument. And this this is a state owned company, the lost revenue would have gone into state coffers, so…
It’s also a bit bunk as folks winning the lottery and paying off their loans in full early - which they are fully entitled to do - causes the same lost revenue scenario. It’s also easy to see a technical fix here (Congress passes an updated law giving Biden and the Department of Ed. to pay back the servicers the potential lost fees and such on each forgiven balance, and then the argument goes away. Instead of backing this, though, they want to punish the student borrowers instead.)
Source: https://www.forbes.com/sites/adamminsky/2024/10/03/judge-transfers-student-loan-forgiveness-lawsuit-in-surprise-win-for-30-million-borrowers/
Archive: https://archive.is/fyp6U
It’s both. The case is being transferred and the program can go into effect (unless the new venue issues a TRO).
What’s the process for if the new venue doesn’t issue a stay, but the final outcome is that they strike down the relief? (I’m really asking.) My payments start back up, and then a month later they double or triple based on the outcome of the case? I just assumed the new venue would stay the relief from going into effect before making a ruling, but you’ve made me nervous.
You’ve actually stated one of the main reasons that TROs are issued. One of the required showings by the petitioning party is to demonstrate “imminent” and “irreparable harm.” In this case the imminent is shown by the plan’s policies and planned implementation as well as the fact that there was a date promulgated for commencement. Irreparable harm would be demonstrated by something similar to your scenario – the petitioner would argue that if it goes into effect and the final determination is that it should not have been permitted to go into effect, that monies which should have been rightfully collected are forever lost, absent an otherwise unnecessary affirmative and costly process of collecting on the marginal difference of payments owed.
To more directly answer your question, the court would direct the companies to collect in a manner which is least onerous to both parties (debtor and creditor); likely a long period of increased collections or (IMHO, more likely) extending the payment period to collect the now-again additional amount due.
I agree with you though, I think given the circumstances and gravity to individual debtors in this case the prudent thing is to stay implementation of the program.
Thank you, a great explanation. The whole situation makes me feel like a rag doll being tossed around the courts. Do I start repaying now? No? Tell me when….Now? No? False alarm. Okay, how about now? I want the relief, but at this point I’d take any decision so I can just make a freaking budget that I can stick to.
Happy to help! And, I totally feel you on the ragdoll thing. I’ve got a lot of dollars in loans in repayment from law school and it would be nice to just be able to work on a budget that I knew wasn’t going to change drastically in a few months (again).
As predicted: Biden’s student loan relief is back on hold after day of legal whiplash.
Makes sense.
I don’t know the answer to this, but here’s to hoping that some forgiveness will successfully & permanently sneak through between rulings/stays!