The U.S. Supreme Court has agreed to review the legality of President Joe Biden’s student debt relief program and decide if the Biden Administration overstepped in forgiving up to $20,000 in debt per borrower.
The program has remained on hold since November, after a federal appeals court in St. Louis issued an injunction, thus prompting the Biden Administration to file an emergency application to the Supreme Court. The high court announced that the program would remain on hiatus until a decision is made on the case. The Supreme Court will begin oral arguments in February and are expected to make their decision in June.
Last month, the Biden Administration extended its pause on federal student loan payments from January 2023 to June 30. If the Supreme Court makes a decision before the June 30 deadline, payments will resume 60 days after the verdict is made. However, if the courts have not made a decision by then, payments will begin in September.
The program has faced a series of legal roadblocks since its introduction in August. In November, a federal judge in Texas blocked the plan, calling the program “an unconstitutional exercise of Congress’s legislative power.” Later that month, six states—Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina—filed an injunction on the program, stating that the Biden Administration overstepped its authority and would rob the states of future tax revenue.
The Biden Administration has countered this argument by maintaining its authority to grant relief under the HEROES Act of 2003, which waives regulations related to student loans during times of war or national emergency. The U.S. has been operating under an emergency declaration since the onset of the COVID-19 pandemic in March 2020.
Lawyers for the states have since shot back at the Biden Administration, arguing that the administration could not use the COVID-19 pandemic to defend the program. “Now, while President Biden publicly declares the pandemic over,” the states’ brief said, [Biden’s] administration is, “using COVID-19 to justify the mass debt cancellation—an unlawful attempt to erase over $400 billion of the $1.6 trillion in federal student-loan debt and eliminate all remaining loan balances for roughly 20 million of 43 million borrowers.”
Solicitor General Elizabeth Prelogar, who filed the emergency application to the Supreme Court, has cited the injunction against the program as “erroneous,” stating that it “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.”
The student debt forgiveness program would cancel $10,000 in federal student debt for borrowers earning less than $125,000, and an additional $10,000 for those who received Pell Grants while enrolled in college.
Since the announcement, over 26 million borrowers have applied for relief and 16 million have been approved, even though no debt has been canceled as of now. The Department of Education (DOE), who owns and manages federal student debt, has also stopped accepting applications due to court orders.
“At this time, we are not accepting applications,” a notice posted on the DOE’s website said. “We are seeking to overturn those [court] orders. If you’ve already applied, we’ll hold your application.”
SEE ALSO:
- Biden Administration Extends Pause on Student Loans Payments Until June
- Student Loan Relief in Limbo After Judge Vacates Biden’s Program
- Biden Cancels $10,000 in Student Debt, Extends Repayment Pause
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.
