The Supreme Court is expected to rule soon on President Joe Biden’s massive student loan forgiveness plan, a central element of his student debt relief agenda. And a decision could be issued in a matter of weeks.
Here’s what borrowers need to know, and when to expect a ruling.
Biden’s Student Loan Forgiveness Plan Is With The Supreme Court
Biden’s unprecedented student loan forgiveness plan, first announced last summer, would provide significant debt relief to tens of millions of borrowers. Borrowers could receive $10,000 in loan forgiveness, or up to $20,000 if they received a Pell Grant for their education. All borrowers with government-held federal student loans — including graduate school borrowers and Parent PLUS borrowers — could be eligible for relief. To qualify, single and married-filing-separately borrowers must have earned under $125,000 in either 2020 or 2021, while married-filing-jointly borrowers must have earned under $250,000.
The Education Department had approved over 16 million borrowers for the relief relatively quickly. However, legal challenges halted the program last fall before anyone actually received student loan forgiveness. The Biden administration appealed these adverse court rulings to the Supreme Court, which agreed to hear the challenges.
Supreme Court Considers Two Main Questions About The Student Debt Relief Initiative
There are two major legal questions associated with the challenges before the Supreme Court
The first is whether federal law authorizes the program. The Biden administration cited to the HEROES Act of 2003 to legally justify the student debt relief plan. The law, passed in the wake of the 9/11 terrorist attacks, gives the Education Department broad legal authority to temporarily change “any” statutory or regulatory legal provision governing federal student loan programs to address financial harms caused by a national emergency.
The Biden administration argued that the Covid-19 pandemic was such an emergency, and argued before the Supreme Court that the broad, express language in the HEROES Act unquestionably gives a presidential administration specific legal authority to cancel student loan debt on a mass scale in response to such an emergency. The challengers, in contrast, argued that this interpretation goes too far, and that Congress could not possibly have contemplated such massive relief.
The second legal issue before the Supreme Court is whether the parties who brought the suits have “standing.” Standing is a legal concept that in order to file a suit in federal court challenging a law or policy, the party must demonstrate that they would be harmed. That harm must be concrete (not speculative) and directly connected to the challenged program. So, for example, you could not file a suit to strike down a federal regulation because the associated policy would harm your neighbor or coworker, and you can’t file a suit because there’s a possibility that you could be harmed, but may not be.
The Biden administration argued that none of the parties have standing to sue. One set of challengers, a coalition of Republican-led states, argued that the student loan forgiveness program would financially harm MOHELA, a state-affiliated loan servicing agency. But the administration argued that MOHELA is financially independent of the state and has authority under state law to sue in its own name, which it apparently declined to do. The administration argued that any financial harm linked to the states is tenuous.
Another set of challengers are borrowers who don’t qualify for the full $20,000 in student loan forgiveness under Biden’s plan. But the Biden administration pointed out that receiving some student loan forgiveness, or no student loan forgiveness, cannot reasonably be characterized as an injury sufficient to confer standing, nor can it be the basis for striking down the program for everyone else. These challengers also argued that they did not get an opportunity to submit public comments as the program was being created, a process that is required when most new federal regulations are established. But the HEROES Act does not mandate this.
During the Supreme Court’s hearing on the challenges in February, an apparent majority of justices expressed significant skepticism of the Biden administration’s arguments that the HEROES Act authorizes such sweeping student loan forgiveness.
But four justices — just one shy of a majority — also expressed skepticism that the challengers have standing. At least two other justices did not say much on the issue of standing. If a majority of justices ultimately concludes that the parties do not have standing, the Supreme Court could decline to strike down Biden’s student loan forgiveness plan, without necessarily addressing whether the HEROES Act authorizes it.
Importantly, only Biden’s one-time student loan forgiveness plan (for $10,000 or $20,000 in relief) is before the Supreme Court. Other Biden administration student debt relief initiatives, such as the Limited PSLF Waiver and the IDR Account Adjustment, are not before the Court at this time.
When The Supreme Court Will Decide Student Loan Forgiveness
A Supreme Court decision on Biden’s student loan forgiveness plan could come out any day, but is expected to be issued in June.
“All opinions of the Court are, typically, handed down by the last day of the Court’s term (the day in late June/early July when the Court recesses for the summer),” according to the Supreme Court’s website. “With the exception of this deadline, there are no rules concerning when decisions must be released.”
A ruling would likely be released toward the end of June if it is a divided ruling, which appears likely. “Typically, decisions that are unanimous are released sooner than those that have concurring and dissenting opinions,” says the website. “While some unanimous decisions are handed down as early as December, some controversial opinions, even if heard in October, may not be handed down until the last day of the term.”
If the Court upholds the debt relief plan, the Education Department may start providing the relief relatively quickly, particularly for borrowers who have already been approved. “If you’ve already applied, we’ll hold your application” for student loan forgiveness, says the department in published guidance. But if the Supreme Court strikes down the program, the administration will have to consider a menu of imperfect options.
In meantime, the Biden administration has extended the ongoing student loan pause — which has suspended payments and interest for most federal student loan borrowers since March 2020 — to 60 days after either June 30 or the date that the Supreme Court rules on the loan forgiveness plan, whichever occurs first. Payments are expected to resume in September or October.
Further Student Loan Forgiveness Reading
Student Loan Forgiveness Eligibility Expanded In 3 Ways Under New Account Adjustment Guidance
Student Loan Interest Rates Set To Skyrocket For Many Borrowers
$55 Billion In Student Loan Forgiveness Approved, Says Biden Administration — And More May Be Coming
Republicans To Advance Plan Reversing Student Loan Forgiveness Approvals For Millions
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