Supreme Court case will determine the fate of student loan forgiveness

Millions of borrowers are stuck in limbo as two lawsuits challenge the Biden administration’s student loan forgiveness program.
Published: Feb. 27, 2023 at 3:49 PM CST
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WASHINGTON (Gray DC) - In a decision that will impact millions of borrowers nationwide, the Supreme Court will hear arguments on two lawsuits which challenge the Biden administration’s legal authority to grant student loan forgiveness.

On Tuesday, arguments begin in the case of Biden versus Nebraska and Department of Education versus Brown. Six Republican Attorneys General from Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina sued in the case of Biden v. Nebraska. Two student loan borrowers from Texas sued in the case of Department of Education v. Brown. Both challenges seek to block the student loan forgiveness program from going into effect.

“The Supreme Court only hears, you know, fewer than 100 cases a year, and there are thousands upon thousands of cases making their way up through the federal court system. So, it is unusual for any case to make it to the Supreme Court. Having said that, this is a monumental case in terms of the issue, in terms of the amount of resources involved. So, it’s not so surprising that the Supreme Court will have the final word,” said Frederick Lawrence with the Georgetown University Law Center.

Last August, President Biden announced student loan forgiveness would be extended through December 31st to combat the financial hardship imposed by the COVID-19 pandemic. It was intended to benefit people making less than $125,000. Eligible Pell Grant recipients could receive up to $20,000 in relief, while other borrowers could receive up to $10,000. In the four weeks the application was open, 26 million people signed up for the relief. That application is now on hold due to a court injunction.

Lawrence said the Biden administration will argue they’re on solid legal ground to issue the relief because of the 2003 HEROES Act.

“The HEROES Act of 2003 is very interesting. It was broader than it had to be. It was in the aftermath of 9/11. It gave the Department of Education the authority to reduce or grant debt or grant relief for debt, canceled debt in the connection with war, other military actions, or national emergencies. So, there are two interesting pieces there. It said national emergencies. It didn’t have to. It could have just said war after 9/11. And, it said in connection with. It didn’t say ending or during the existence of. This is in connection with national emergencies. I think the Biden administration is going to argue very strongly this is in connection with a national emergency - that it was implemented during a national emergency. And even after the emergency officially ends, young people will be transitioning back into the workforce after the emergency. So, they’re going to argue that’s in connection with the emergency,” he said.

But the court challenges argue that the extension is unfair and financially harmful to states and organizations that service student loans.

Plus the Republican attorneys general say, the pandemic is over.

Arkansas Lieutenant Governor Leslie Rutledge served as the Attorney General when the Biden v. Nebraska case was first filed. Arkansas is one of the states involved in the initial suit. Back in September, she told Washington News Bureau reporter Jamie Bittner the HEROES Act should not be applied.

Rutledge said, “quite honestly, it’s shameful that President Biden would use the HEROES Act, which was designed to give financial relief to our brave men and women in the military, as well as those incurring this debt and challenges during a national emergency. President Biden just a few short weeks ago announced that the pandemic was over. Perhaps President Biden forgot that he stated the pandemic was over when he used the HEROES Act, rather than using the HEROES Act to support our brave men and women in military.”

She added, the program is unfair.

“Every American is hurt by this student loan cancelation plan of President Biden,” said Rutledge. “It now puts the debt of those adults who decided to go to college, who chose to take out these loans, it now puts that debt on the backs of hard working electricians, plumbers, teachers, nurses.”

If the Supreme Court would rule in favor of the Biden administration, the Department of Education said they’re ready to send out the relief. They’ve already processed 16 million of the 26-million applications they’ve received so far.

With a conservative majority, it is unclear how the court will rule.

“There certainly are some justices who are going to be skeptical at this use of federal power. But, these same justices believe in close reading of statutes. So it’s going to be interesting to see what they do. If you really read what the statute says, I think the word suggests that this can be done, as I say. It’s not the only thing that could be done. The administration could have decided not to do it. The question is, is there authority there?” said Lawrence.