The United States Supreme Court announced on Thursday that it will review the legality of President Joe Biden’s federal student loan debt relief plan, putting borrowers on track to learn the program’s fate by next summer.
Lower courts have been blocking the program, which would grant up to $10,000 or $20,000 in federal debt relief to student borrowers earning less than a certain income, depending on the type of loan used, since November. Initially, the administration intended to begin rolling out cancellations.
The Supreme Court agreed to hear oral arguments in February, allowing the case to move more quickly, and a decision is expected by the end of the term in June. The arguments in February are also likely to shed light on how the justices perceive the program.
Despite requests from the Biden administration to allow it to continue while the case is being heard in court, the program will be put on hold until the final decision is made.
Later Thursday, White House press secretary Karine Jean-Pierre said, “we welcome the Supreme Court’s decision to hear the case.” She described the program as “legal, supported by careful analysis from administration lawyers,”
According to the Department of Education, 26 million people applied before the program was halted, and 16 million applications were reviewed and approved for relief – though no loan cancellations were issued before court orders halted the program.
The current legal limbo jeopardizes Biden’s pledge to forgive up to 43 million Americans’ student loan debt. He made such a promise during his 2020 presidential campaign and repeated it during the 2022 midterm elections, telling crowds of supporters that he believed he was on solid legal ground and would prevail over Republican attacks on the plan.
Conservatives and other critics argued that loan debt forgiveness was beyond a president’s authority and would unfairly penalize people who either did not take out loans or had paid them off.
“As soon as I announced my administration’s plan on student debt, they started attacking it, saying all kinds of things. Their outrage is wrong and it’s hypocritical,” Biden said in late October at a rally at Delaware State University. “We’re not letting them get away with it.”
“I’m completely confident my plan is legal,” Biden reiterated in a video on Twitter in late November.
However, while early court cases against the program were dismissed due to a lack of standing – that is, a lack of someone or something demonstrating that they were harmed by it – subsequent challenges were more successful. In two separate cases, an appeals court in Missouri and a district court in Texas ruled that the program was illegal and an overreach of the Biden administration’s powers.
Those decisions put the program in jeopardy just as student loan payments were set to resume for the first time in nearly two years, following a lengthy COVID-19 pandemic pause, prompting Biden to extend a moratorium on loan payments that began under President Donald Trump.
Payments will not resume until the program’s fate is determined, Biden announced in November, rather than on January 1, as originally planned.
According to the administration, student loan payments will resume either 60 days after the Supreme Court rules on the relief program or 60 days after June 30 – whichever comes first.
“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it’s just plain wrong,”Miguel Cardona, Secretary of Education, stated in a November statement announcing the moratorium’s extension.
“We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests,” he said then.
Conservative groups have filed lawsuits claiming that Biden’s plan exceeds the authority of his administration, that it unfairly excludes Americans who will not receive debt relief, and that certain loan servicers will lose revenue.
The most important case, which will be heard by the Supreme Court, was filed by six conservative states: Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina.
However, the Biden administration argued that the debt cancellation fell squarely within the purview of the Education Department, which oversees federal loans, because the department is responsible for protecting borrowers during national emergencies such as the COVID-19 pandemic.
“Indeed, the entire purpose of the HEROES Act is to authorize the Secretary to grant student-loan-related relief to at-risk borrowers because of a national emergency — precisely what the Secretary did here,” In a Supreme Court filing, Solicitor General Elizabeth Prelogar wrote.
Prelogar argued that it is the secretary’s responsibility “to ensure that borrowers affected by a national emergency are not worse off in relation to their student loans,” and that if the Department of Education does not act to cancel debts, there could be a “spike” in loan defaults when the moratorium on student loan payments ends.
According to the nonpartisan Congressional Budget Office, the program will cost around $400 billion in total.
