What Happens If The Supreme Court Strikes Down Biden’s Student Loan Forgiveness Plan?

What Happens If The Supreme Court Strikes Down Biden’s Student Loan Forgiveness Plan?

President Joe Biden‘s ambitious plan to provide up to $20,000 in debt relief for 40 million borrowers came under fire on Tuesday during a Supreme Court hearing.

The landmark hearing concerned two legal challenges which had blocked the Biden administration’s relief program.

Several justices voiced deep skepticism over the proposal, raising questions as to its future.

The first challenge was brought forward by a group of Republican-led states arguing Biden’s plan would deprive them of revenue by encouraging borrowers with commercial FFEL-program loans to move their loans to the Department of Education’s Direct lending program.

The second case, raised by a conservative-leaning legal organization, contested that Biden had launched the program irregularly without the proper regulatory channels, including public comment.

The Biden administration responded to these claims, arguing that the initiative was legal per Congress’ authorization of the HEROES Act of 2003, a statute that allows for “waiving” and “modifying” federal student loan programs in the face of a national emergency, such as the Covid-19 pandemic.

Officials also maintained that the challengers could not demonstrate that the student debt relief proposal in any way harmed affected agencies such as MOHELA.

For the two borrowers in the second lawsuit, the administration argued that one was still eligible for student loan forgiveness and the other had no legitimate injury in the matter.

Several justices seemed to dispute the legality of Biden’s student loan forgiveness proposal.

Chief Justice John Roberts suggested that Congress should be the one to make such a drastic decision.

Justice Thomas and Kavanaugh noted the language of the HEROES Act lacked any reference to loan forgiveness or cancellation.

Gorsuch and Alito questioned the fairness of the plan to those who had managed to pay off their student debt or had never taken on any.

Broadly, the three liberal justices focused on the issue of standing.

Justice Sotomayor noted that a third party cannot step in on someone else’s behalf in a federal lawsuit.

Justice Kagan elucidated the independence of MOHELA from the state of Missouri.

Finally, Justice Jackson expressed worry about the Court’s precedent should the ruling extend the states’ ability to intervene in federal program.

The Supreme Court is expected to issue a ruling in May or June. A ruling in favor of the administration could lead to student loan forgiveness for approved borrowers within weeks.

An unfavorable ruling, however, would have the administration returning to the drawing board, as it has no backup plan in place.

Regardless of the Court’s decision, President Biden has extended the current loan payment pause to 60 days after either June 30 or the date of the Court’s ruling.

Borrowers should keep an eye on the Court’s outcome for a glimpse of their future debt relief.

Credit: https://www.forbes.com/sites/adamminsky/2023/02/28/bidens-student-loan-forgiveness-plan-might-be-in-trouble-following-supreme-court-hearing/

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