Biden defends student loan forgiveness to Supreme Court as cancellation remains blocked for borrowers

January 5, 2023, 3:23 PM UTC
Student Loan Borrowers Gather At The Supreme Court To Tell The Court That Student Loan Relief Is Legal
The U.S. Justice Department kicked off the new year by filing a brief with the U.S. Supreme Court, defending President Joe Biden’s widespread plan to forgive student loan debt for an estimated 40 million borrowers.
Larry French—Getty Images

The U.S. Justice Department kicked off the new year by filing a brief with the U.S. Supreme Court, defending President Joe Biden’s widespread plan to forgive student loan debt for an estimated 40 million borrowers.

Last August, Biden announced his administration would forgive up to $10,000 in federal student loan debt for most borrowers, and up to $20,000 for those who had Pell Grants while in school. Though there was great urgency around the debt relief plan when it was announced, a federal court put it on hold in October after multiple lawsuits were filed.

There are two primary challenges the Biden administration is arguing against: One from six conservative states that say the president is overstepping his authority in forgiving the debt (which they say should be done by Congress), and one from two student loan borrowers who do not qualify for forgiveness and say there should have been a public comment period before the plan was enacted.

Now, in a brief to the Supreme Court, the Biden administration is arguing that the Higher Education Relief Opportunities for Students, or Heroes, Act of 2003 gives Education Secretary Miguel Cardona the authority to cancel the debt without congressional approval. The government is also arguing that the six states—Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina—do not have standing to sue.

The states’ challenge relies on Missouri suing on behalf of the Missouri Higher Education Loan Authority (Mohela), a federal student loan servicer in that state. Former Missouri Attorney General Eric Schmitt, one of the plaintiffs in the states’ case, argued that the relief program would cause financial harm to the loan servicer, which would also affect Missouri’s finances.

While Mohela was created by the state, the federal government argues that it is now a completely separate entity, and thus the state will face no financial harm. Mohela is not a party in the case and has not come out in favor of the suit, writing in a letter to Missouri Rep. Cori Bush, a Democrat, that its executives were not involved in the decision to file the lawsuit against the relief plan.

Regarding the two individuals suing, the government says the Heroes Act precludes them from having a public comment period.

The Supreme Court will hear arguments in the case next month. It is expected to come to a decision by June.

Until then, federal student loan payments will continue to be deferred by the federal government; payments were scheduled to resume this month, but now borrowers will not need to make them until the legal challenges are settled, and interest will not accrue. Borrowers have not had to make a payment since the start of the COVID-19 pandemic in 2020.

The Education Department opened a streamlined application in October, and an estimated 26 million borrowers applied before it was closed by court order. The White House said 16 million applications have already been approved.

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