Biden admin warns of increased student loan defaults without forgiveness plan

• The Department of Education last week pulled the relief application offline after millions of borrowers had already signed up.
• If the program took effect, it would cancel up to $20,000 in student debt for Pell Grant recipients and up to $10,000 for individual borrowers who make under $125,000 per year.
• President Biden has previously said more than 40 million Americans could benefit from the relief.

What they're saying: "Unless the [Education Department] is allowed to provide debt relief, we anticipate there could be an historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic," James Kvaal, the department's under secretary, said in the filing.

• "This could result in one of the harms that the one-time student loan debt relief program was intended to avoid," Kvaal added.
• The people most at risk of defaulting are "the approximately 18 million borrowers eligible for one-time debt relief who would have their federal student loans discharged in their entirety under the program," he added.

The big picture: While some of the legal challenges against the program have been dismissed, a federal appeals court upheld one lawsuit and blocked the program on Monday, just days after a federal judge in Texas struck it down

• After a federal judge in Texas declared the program illegal, the Biden administration stopped accepting applications for forgiveness.
• At least 26 million borrowers had already given the Education Department the information to be considered for the debt relief.

Editor's note: This story has been updated with new details throughout.