The Supreme Court is listening to arguments over President Biden’s student loan debt relief plan today, in a final straw that will either see the controversial plan upheld, reduced, or completely erased.
The plan, first announced in August 2022, was paused in November after a federal appeals court in St. Louis issued an injunction against it. This prompted the Biden Administration to file an emergency application to the Supreme Court, who later announced its hiatus until a decision is reached.
While the high court is listening to oral arguments today on the plan, a decision is not expected to be announced for months and may come as late as June. As a result, the Biden Administration once again extended the pause on the resumption of federal student loan payments until that month.
In the case that the Supreme Court announces a final decision on Biden’s forgiveness plan before June, payments will then resume 60 days after the verdict is made. If the courts have not resolved the case by June 30, payments will resume 60 days after in September 2023.
As The New York Times reports today, the nine justices were revealing their leanings somewhat as attorneys presented their oral arguments Tuesday, with the conservative majority seeming deeply skeptical of the legality of the Biden administration’s plan.
Multiple legal roadblocks
Biden’s long-awaited student loan debt relief plan has faced a series of legal barriers since its introduction. It all started in November, when a federal judge in Texas blocked the plan after a lawsuit claimed it had unreasonably excluded two students.
The suit names two plaintiffs, Myra Brown and Alexander Taylor, who both say they were unfairly barred from Biden’s plan. According to provisions within the plan, Brown is ineligible for debt relief because her federal loans were operated by a commercial lender instead of the Department of Education (DOE). While Taylor is eligible for the $10,000 repayment, he is arguing for the full $20,000 relief based on his low-income status. Currently, only students who received a Pell Grant while enrolled in college can qualify for additional relief.
This challenge will be one of the two conservative-backed lawsuits that the Supreme Court will hear.
The other lawsuit involves six Republican-led states—Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina—who filed an injunction on the program, stating that the Biden Administration overstepped its authority and would rob states of future tax revenue. Lawyers for the states have also argued that the administration could not use the COVID-19 pandemic to defend the program.
The Biden Administration has since countered both arguments by maintaining its authority to grant relief under the HEROES Act of 2003.
Dems call for support
Solicitor General Elizabeth Prelogar, who filed the emergency application to the Supreme Court, has cited the injunction against the program as “erroneous,” and “leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations.”
Sen. Elizabeth Warren (D-MA), a prominent supporter of student loan debt relief, released a report yesterday on the lasting impacts the relief could have on millions of student loan borrowers. Last month, the senator asked close to 20 advocacy groups about how the dismissal of relief would affect their members.
“If the Supreme Court sides with the extremist judges, millions of Americans’ monthly costs will rise significantly when student loan payments resume later this year,” the report found.
Nearly every response to Senator Warren’s inquiry cited the financial hardship of COVID-19 compounding the existing student loan burden felt by millions of Americans, the report said.
Organizations who responded to Warren’s query noted other long-term effects of the plan, including closing future gaps of generational wealth for communities who have historically been disproportionally impacted through social and economic influences.
“Lifting this burden would help our communities build generational wealth, bolster the economic strength of our country, and live a life of dignity,” responded UNIDOS, a Hispanic civil rights organization, in the report. “It would help put food on the table, pay rent, buy a home. It would keep parents in the workforce by helping pay for childcare or elder care. It would allow us to have a stake in the communities we call home.”
Others have defended the legality of Biden’s student loan debt relief plan. Former Representative George Miller, an architect of the HEROES Act of 2003, recently wrote an op-ed supporting Biden’s plan for The Washington Post, and defended the administration’s use of COVID-19 as a national emergency when implementing the HEROES Act.
“The Supreme Court should respect the law that Congress passed and the authority that it gives the education secretary,” writes Miller in his piece, echoing a previous amicus curiae brief he wrote in November on the plan’s legality. “To reach that result, the court doesn’t need to address the debate among former lawmakers about what Congress ‘intended.’ It should look no further than the text of the law that my colleagues and I passed.”
Student loan repayment matching in SECURE 2.0
SECURE 2.0 provisions don’t just extend to pooled employer plans (PEPs) and part-time workers—it covers education, too. Beginning in 2024, SECURE 2.0 permits employers to make matching contributions to a 401(k) or a similar plan with respect to an employee’s qualified student loan payments. The new legislation will also allow for remaining balances in 529 accounts to be rolled into a Roth individual retirement account (IRA).
SEE ALSO:
- Supreme Court to Weigh in on Biden’s Student Loan Relief
- Biden Administration Extends Pause on Student Loans Payments Until June
- What the Heck is Happening with Biden’s Student Loan Relief?
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
