Supreme Court will take up Biden’s student loan forgiveness plan

The US Supreme Court has declined to reinstate President Joe Biden’s plan to cancel student debt balances for millions of borrowers, but justices will hear oral arguments in the case in February.

The nation’s high court will review whether the Biden administration can legally cancel outstanding federal student loan debt balances up to $10,000 for roughly 40 million Americans, or $20,000 for borrowers who relied on Pell grants to fund their college and university admission.

A long-anticipated plan for widespread debt cancellation was met almost immediately with legal threats from conservative legal groups and Republican officials. Two lawsuits have successfully blocked the programme.

The US Court of Appeals for the 8th Circuit granted a request from six Republican-led states for a nationwide injunction that halts the plan during the legal battle.

A federal judge in Texas in a separate case also ruled that the administration did not have authority to implement it and had unlawfully sidestepped Congress. The US Court of Appeals for the 5th Circuit rejected a request from the US Department of Justice to put the Texas ruling on hold during an appeal.

Meanwhile, millions of borrowers who have already applied for relief will have to wait.

Last month, the administration announced another extension of the Covid-19 pandemic-era moratorium on repayments and interest, a pause that has been extended several times since 2020, in an attempt to help “alleviate uncertainty” about borrowers’ financial futures, according to the White House.

“It isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the courts consider the lawsuit,” President Biden said.

White House Press Secretary Karine Jean-Pierre said on Thursday that the administration welcomes the Supreme Court’s decision to hear the case, stressing that the plan is “legal, supported by careful analysis from administration lawyers. “

“President Biden will keep fighting against efforts to rob middle class families of the relief they need and deserve,” she added. “As we previously announced, student loan payments will remain paused while the Supreme Court resolves the case.”

In a filing to the court, US Solicitor General Elizabeth Prelogar said GOP-led states challenging the administration’s plan do not have legal standing to reverse the plan. She pointed to federal law that gives the Secretary of Education broad authority to make changes to student loan programmes, which had been altered under both Donald Trump and Biden administrations.

“Congress authorized the Secretary of Education to respond to national emergencies by providing relief to affected student loan borrowers,” she wrote to the court. “Without making any finding that the secretary exceeded that express statutory authority, the [appeals court] issued a nationwide injunction preventing the Secretary from granting critical relief to millions of Americans suffering the continuing economic effects of a global pandemic.”

In a statement last month, Education Secretary Miguel Cardona condemned “callous efforts to block student debt relief in the courts” that have caused “tremendous financial uncertainty.”

“We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests,” he added.