President Biden vetoed a measure from Congress to overturn the administration’s student loan forgiveness plan as the Supreme Court is set to decide on two challenges to the plan this month.
06/09/2023 2:25 P.M.
3 minute read
There are only a handful of days left this month for the U.S. Supreme Court to issue opinions in pending cases, two that aim to halt the Biden administration’s plan to forgive up to $20,000 in federal student loans for borrowers.
The court released four opinions June 8 with no news on the student loan cases.
Potential opinion days for the remainder of the courts term include June 15 and June 22, according to scotusblog.com, which provides a live blog feed of the court’s activity on opinions and oral arguments.
Oral arguments in both student loan cases were held in February.
In the first case, Biden v. Nebraska, group of six Republican-led states challenged the student loan forgiveness plan, claiming the loss of tax income and other revenues from state organizations’ business dealings with some loan servicers would cause their economies to suffer, ACA International previously reported.
The 8th Circuit Court of Appeals issued a temporary injunction in November 2022 to halt the program until the legality of the debt relief is decided.
In the second case, Department of Education v. Brown, brought by two individuals, backed by the Jobs Creators Network Foundation, a Texas district judge ruled in the complaint that the Biden administration lacked the authority to establish the student debt relief program.
In November 2022, the 5th Circuit Court of Appeals maintained the district court’s decision.
The arguments focused on Education Secretary Miguel Cardona’s authority to create a loan cancellation program under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 and whether a group of Republican state attorneys general and two student loan borrowers had standing to file suit against the federal program, ACA previously reported.
What’s Next?
President Biden’s veto of the congressional measure against the student loan plans turns it back over to the Supreme Court.
During February’s oral arguments, the plans faced criticism on the basis of their legal standing, ACA previously reported. The Hill says conservative justices on the Supreme Court are expected to rule against the student loan relief.
In an analysis put out by Temple University, Mark Rahdert, professor of constitutional law at Beasley School of Law, weighed in on the potential outcomes of the Supreme Court’s decision:
“In the event that both cases get dismissed, Rahdert says it is still possible that new lawsuits could pop up in the future. He has an eye on student loan servicers—agencies responsible for processing student loan payments—in particular because they may have legal grounds to file a lawsuit against the Biden administration.
‘Student loan servicers would certainly have grounds to bring forward a lawsuit against the Biden administration because they can argue that their business interests are being impacted by the student loan forgiveness plan,’ Rahdert said.”
Meanwhile, student loan payments are set to resume Sept. 1 by orders from the U.S. Department of Education and language in the debt ceiling bill finalized on earlier this month.
The Consumer Financial Protection Bureau’s Office of Research released a blog with an outlook on borrowers’ payment ability come September.
Key trends include:
- “More than one-in-thirteen student loan borrowers are currently behind on their other payment obligations. These delinquencies are higher than they were before the pandemic, despite a small seasonal decrease in the most recent data.
- About one-in-five student loan borrowers have risk factors that suggest they could struggle when scheduled payments resume.
- Median scheduled payments on other debt obligations have increased by 24 percent for student loan borrowers likely returning to repayment. In percentage terms, these increases are especially large for younger borrowers (252 percent, or $65 to $229).
- More than four-in-ten borrowers in our sample will return to repayment with a new student loan servicer.”
The Office of Research used the bureau’s Consumer Credit Panel data with credit histories of consumers expected to return to paying their student loans by the end of summer, representing about 32 million borrowers.
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