The similar cases center on the plaintiffs’ standing to legally challenge the student loan forgiveness plan and the Biden administration’s federal authority to enact such plan.
02/24/2023 1:00 P.M.
4 minute read
The U.S. Supreme Court will hear oral arguments in two cases Feb. 28 that hinge on challenges to the Biden administration’s student debt relief plan.
The Biden administration, with the help of the U.S. Department of Justice (DOJ), appealed legal challenges to its student loan forgiveness plan to the Supreme Court in Biden v. Nebraska and Department of Education v. Brown.
The DOJ is seeking to remove an injunction preventing the plan from moving forward in the U.S. Court of Appeals for the 8th Circuit (Biden v. Nebraska) as well as a pause from the U.S. Court of Appeals for the 5th Circuit in a Texas case that found the plan is illegal (Department of Education v. Brown), ACA International previously reported.
Biden’s plan would reinstate student loan forgiveness for federal borrowers earning less than $125,000 a year, providing up to $10,000 in debt relief, and up to $20,000 for students who received a Pell Grant.
Opponents of the student debt relief plan have said Biden doesn’t have the authority to enact such relief, rather that it should come from Congress, and that the plan goes against the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, according to Politico.
Vaishali Rao, a partner at ACA International member firm Hinshaw & Culbertson LLP, recently told Fortune in an interview (republished by Yahoo Finance) that “the court will decide whether the COVID-19 emergency is appropriate rationale for widespread relief.”
“The HEROES Act language is pretty clear that the government has the authority to cancel the debt,” Rao said in the article. “Does it make sense for the circumstances, or is there something narrower that could be done?”
Rao has spoken with ACA on the subject as well, stating that student loan forgiveness won’t fix the problem of student loan debt and access to affordable education.
“There are still new entrants coming into the system who are going to face all of the same things that folks who entered the system just a few years ago or longer did,” Rao told ACA in 2022, when various student loan forgiveness plans were under consideration. “And the question is, why has the cost of education increased so much? Why are borrowers unable to access affordable education? Why is the debt so high? Those are the questions that I think are rightly placed with the federal government because they speak to the long-term health of the higher education system.”
Currently, the U.S. Department of Education has extended the pause on student loan repayment, interest, and collections through June 30, 2023, while the Supreme Court’s hearing of the case proceeds, ACA previously reported.
The DOE reports that borrowers can use the continued payment pause to make sure their contact information is correct with student loan servicers and consider signing up for electronic debit and income-driven repayment plans.
According to Forbes, after Tuesday’s oral arguments, the Supreme Court could restore Biden’s student loan forgiveness plans on the grounds the parties bringing the cases do not have standing, or by ruling in favor of the administration’s authority to carry out such plans.
If the Supreme Court agrees with lower courts that already ruled on the issue and then strikes down the plan, the Biden administration may need to develop different options for debt cancellation, according to the article.
A decision on the case could come at any time after the oral arguments, but a majority of the Supreme Court’s opinions from its current term are expected in June.
Legislative Reform
Meanwhile, U.S. Sen. Chuck Grassley, R-Iowa, has introduced a bill (PDF) with U.S. Sens. John Thune, R-S.D., and Bill Cassidy, R-La., to stop Biden’s plans to cancel student loan debt, according to a news release.
The bill would prohibit debt cancellation, end the student loan payment pause and prevent universal moratoriums on payments in the future.
Also on the legislative front, bill proposals referred to the House Committee on Education and the Workforce seek to protect federal student loan borrowers when payments resume, ACA previously reported. The Debt Cancellation Accountability Act of 2023 introduced in the House and Senate would “prevent class-based loan forgiveness for federal student loans under title IV of the Higher Education Act of 1965 without the explicit appropriation of funds by Congress for such purpose.”
Bloomberg reports there is pressure from Congress for the Biden administration to develop a backup for relief if the Supreme Court rules against the current plan.
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