As the U.S. Supreme Court prepares to hear arguments for and against President Joe Biden’s widespread student loan forgiveness, an analysis finds that many borrowers are on similar or stronger financial footing now than they were before the COVID-19 pandemic, thanks to relief measures put in place over the past three years.

Part of the Biden administration’s argument in favor of widespread student loan forgiveness—up to $10,000 or $20,000 per borrower—is that the pandemic put many borrowers in a precarious financial position.

Research from the Urban Institute shows the finances of many borrowers have stayed relatively stable over the course of the pandemic—if not improved slightly. This comes from self-reported survey data and data that shows credit scores improved for many student loan borrowers over the past three years. Additionally, the share of borrowers with other types of debt (such as utility, medical, retail) fell from 31% to 25% from before the pandemic to August 2022.

But that doesn’t mean Biden’s argument is wrong. The researchers, Matthew Chingos and Jason Cohn, note borrowers’ improved financial situation can be largely attributed to the pause on federal payments and interest accrual that has been in effect for almost three years.

“There is little evidence to suggest that most student borrowers are worse off than they were before the pandemic,” the researchers write. “What is less clear is whether this would have been the case without the payment pause and whether this will continue to be the case once student loan payments resume.”

In fact, if the pause were to be lifted, it is likely that delinquencies would rise once again, the researchers say. Borrowers, especially low income borrowers, report being uncertain if they will be able to make their student loan payments once the pause ends. About half of those with student loan debt are concerned about whether they will be able to make ends meet over the next 12 months, compared with one-third of those without debt, according to the Federal Reserve.

“At least some borrowers will not successfully resume repayment and will default,” the researchers from the Urban Institute write. To what degree is anyone’s guess.

Where student loan forgiveness stands

Biden announced in August 2022 that his administration would forgive up to $10,000 in federal student loans for single borrowers making less than $125,000 a year (or $250,000 for married couples). Those who have Pell Grants would be eligible for up to $20,000.

The legal authority the Biden administration is using to cancel the debt falls under the 2003 Higher Education Relief Opportunities for Students, or HEROES, Act, which enables the secretary of education to make changes to the federal student loan program during national emergencies if borrowers have “suffered direct economic hardship.”

The conservative legal challenges began immediately; two have made it to the Supreme Court. Some are challenging the legal authority the Biden administration is using, saying it’s overreach.

The Biden administration argues that the pandemic “profoundly disrupted” the economy and “inflicted severe economic harms, including mass layoffs, food insecurity, spikes in inflation, rising delinquency rates on debt, and projected reductions in lifetime earnings for students who left school during the pandemic.”

The HEROES Act was used as the justification for the pause on federal student loan payments, which was put in place by then-President Donald Trump’s Secretary of Education Betsy DeVos. Now, the Biden administration says current Education Secretary Miguel Cardona determined that despite the payment pause and other relief measures, resuming payments would hurt many lower-income borrowers. That’s where the one-time relief stems from.

“Additional relief beyond the payment pause is necessary to ensure that affected borrowers are not ‘in a worse position financially as a result of the COVID-19 pandemic,’” the administration wrote in a brief to the Supreme Court.

The administration notes that historically, borrowers who’ve had their loans paused during an emergency (such as a natural disaster) are at elevated risk of delinquency and default when they resume their payments. The Urban Institute’s research backs this up.

“Default rates increase twentyfold after the period of nonpayment ends, and affected Pell Grant recipients experience even larger increases in default,’” the brief reads. “That data suggests that a pause on payments alone is not necessarily sufficient to alleviate the economic effects of a disaster on the affected borrowers’ ability to repay their loans.”

The Urban Institute report says both the federal government and those bringing legal challenges against the one-time forgiveness can “find evidence to support their case” in the report. While the data suggests most borrowers made it through the pandemic in okay financial shape, there is also data indicating the worst effects will come when the payment pause ends.

One thing is clear, though, the researchers write: Regardless of what the Supreme Court decides, there will be pain for some borrowers when student loan payments resume.

“It is critical that the Biden administration focus on ensuring that the restart of payments does not further harm vulnerable borrowers,” they write.