Earlier this month, the Supreme Court heard arguments over President Biden’s student loan forgiveness plan, which is currently being challenged in court by two different groups. The first lawsuit arises from a group of six Republican-led states, with the second brought by two individuals. Each group is accusing President Biden of overstepping his authority by implementing the new forgiveness plan by executive order. The Supreme Court heard both cases and may rule on them individually or jointly. Their official ruling likely won’t be issued until late June, but in the meantime, here’s a quick recap of what you need to know about the hearings.
The debate surrounding the issue of loan forgiveness largely focused on a few specific points. Firstly, the legal standing of the Republican-led states was questioned by the Court. The states are suing on behalf of the Higher Education Loan Authority of the State of Missouri (MOHELA), a loan servicer. For the states to have legal standing to sue, they would need to demonstrate that harm done to MOHELA by loan forgiveness programs would also harm the states themselves. Justices on the Court questioned if the potential losses to MOHELA could be reasonably extended to a negative impact on these states, and Justice Amy Barrett went so far as to ask during the hearing, “If MOHELA is an arm of the state, why didn’t you just strong-arm MOHELA and say you’ve got to pursue this suit?” (source).
The other main question reviewed by the Court centered around the major questions doctrine. This principle states that an agency is only able to make determinations on matters that have significant economic or political consequence if Congress has given clear authority to do so. Given the $400 billion estimated price tag of the student loan forgiveness plan, some justices seemed to insinuate that this threshold had not been met. U.S. Solicitor General Elizabeth Prelogar, on the other hand, argued on behalf of the Biden administration that the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 justifies the forgiveness plan (source). The language of the act states that the Secretary of Education is able to “waive or modify” federal student aid programs, such as loans and grants, in response to wars or national emergencies, such as the COVID-19 pandemic.
Graphic courtesy of Emma Rubin at Stacker.
It is unclear which way the Court will rule, though some experts suspect they may side with the challengers and block the forgiveness program if the justices vote strictly along ideological lines. Still, Miguel Cardona, the Secretary of Education, wrote in an email to millions of American borrowers shortly after the hearing that “[the] Administration is confident in our legal authority to adopt this plan.”
For the time being, loan repayments will remain paused. Regardless of the decision made about debt forgiveness, payments on loans will start again 60 days following the Court’s decision, or 60 days after June 30th if no ruling is issued (source). As for debt forgiveness, the fate of the program lies in the hands of the Supreme Court. Until the Court’s anticipated ruling this summer, the future of the student loan forgiveness plan remains unsure.
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