Supreme Court Will Hear Arguments On Biden’s Stalled Student Loan Forgiveness Plan

Topline

The Supreme Court will hear oral arguments in a case challenging President Joe Biden’s student loan forgiveness plan, the court announced Thursday, which means a final decision on the program’s legality will come by June—but the White House will remain blocked from giving out any relief to borrowers.

The U.S. Supreme Court Building in Washington, D.C.

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Key Facts

The court said Thursday they’ll take up the case Biden v. Nebraska, in which a coalition of Republican-led states—Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina—sued to block the Biden Administration’s student loan forgiveness plan for federal loan borrowers.

The lawsuit argues that the Biden Administration exceeded its authority in imposing the forgiveness program and that it has a negative impact on the states by harming tax revenues from state-operated programs that service federal loans, while the Biden Administration argues the states don’t have standing to challenge the policy.

The Biden Administration had asked the court to take up the case after the 8th Circuit Court of Appeals ruled against the White House and decided to block the policy while the litigation against it moved forward, one of two court rulings in separate cases that have kept the policy from taking effect and funds from being disbursed.

Oral arguments in the case will take place in February, the court said, and a ruling should come a few months afterwards, by the time the court’s term ends in June.

The Biden Administration had also asked the court to temporarily reinstate the policy while the litigation moved forward, but the court declined to do so now and deferred that decision until after oral arguments, meaning the debt relief will remain blocked until February at the earliest, and possibly until a final ruling is issued in June—in time for the moratorium on student loan repayments to resume on June 30.

The White House and Department of Education have not yet responded to requests for comment.

Crucial Quote

The 8th Circuit order that blocked the forgiveness plan “leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations,” the Biden Administration wrote in their petition asking the court to take up the case.

What To Watch For

The Supreme Court may also hear a second case on student loan forgiveness, after the 5th Circuit Court of Appeals denied Wednesday the White House’s request to reinstate the program in a second case. That case was brought by the conservative Job Creators Network on behalf of individual borrowers, arguing the forgiveness policy harmed the borrowers by not having a public comment period, and resulted in the program being struck down in November by a Trump-appointed district judge. The Biden Administration told the court before the 5th Circuit’s decision that it intended to take the case to the Supreme Court if the appeals court ruled against it, but hadn’t filed anything yet with the court as of Thursday afternoon. Both cases will ultimately have to be resolved in the Biden Administration’s favor for the student loan forgiveness program to take effect.

Big Number

26 million. That’s the number of federal student loan borrowers who had applied for student loan forgiveness before applications for the program were suspended on November 11, according to the Biden Administration—more than half of the 43 million borrowers who are eligible for debt relief.

Key Background

The Biden Administration announced in August that it would forgive $10,000 in federal student debt for borrowers earning less than $125,000, or $20,000 in forgiveness for Pell Grant recipients. The White House justified the program under the federal HEROES Act, which allows the secretary of education to “waive or modify” any student financial assistance programs during national emergencies, as the Biden Administration argued the Covid-19 pandemic is. While hailed by many borrowers, the program attracted widespread criticism from Republicans, and the GOP states’ challenge is one of a slew of lawsuits that have opposed the program. The Supreme Court’s decision to take up the case comes after Justice Amy Coney Barrett rejected multiple other legal challenges to the forgiveness plan, acting on her own as the justice who considers cases from that appeals court. Those cases were based on different legal reasoning and were considered weaker challenges than the GOP states’ case, however, giving the court reason to now consider the issue.