The latest step in President Joe Biden’s efforts to forgive most borrowers thousands of student loans will be at stake when the Supreme Court hears arguments in the case Tuesday.
After a series of legal challenges, including from six GOP states, the nine justices will hear arguments for Biden’s plan to wipe out up to $20,000 in federal student loan debt, which could cost taxpayers as much as $400 billion.
The plan, which Biden announced in August, would forgive $10,000 in student loans to individuals earning less than $125,000 and married couples earning less than $250,000 combined. That forgiveness would amount to $20,000 if the borrower received a Pell scholarship, which helps students from low-income families.
A Supreme Court ruling puts more at stake than student loans.
If the decision that Biden’s executive action was unconstitutional, it could cripple further plans to use it in other areas and give more power to states’ legal challenges to federal policymaking.
The Supreme Court will hear oral arguments Tuesday in the case that will decide the fate of President Joe Biden’s student loan forgiveness plan. Pictured: Biden and Secretary of Education Miguel Cardona discuss their contingency plan at an event at the White House on Oct. 17, 2022
The plan would eliminate up to $20,000 in debt for most borrowers, but would cost taxpayers $400 billion. Some proponents argue that the plan does not go far enough and that all debts should be forgiven
Republicans immediately denounced Biden’s order as unfair to those who did not go to college and would have to help pay taxes for the forgiveness plan — or to those who have already paid off their loans or never took out loans to begin with.
On the other hand, some activists said the plan didn’t go far enough, claiming that all student loan debt should be wiped out.
Six Republican-led states challenged President Biden’s proposal, claiming that the administrative process should go through a proper response and response period, also claiming it was too broad in scope.
The 6-3 Conservative majority will have the final say on the matter after it has worked its way through the legal system.
Biden used a 2003 law called the HEROES Act that allowed his education secretary Miguel Cardona to provide aid in times of national emergency.
The states claim, according to their legal instructions, that the proposal pursues “breathtaking and transformative power” by relying on “a tenuous and pretextual connection to a national emergency.”
Student loan borrowers have entered a year of uncertainty.
Biden’s announcement of forgiveness in August also came as he announced the latest extension of student loan deferments due to the COVID-19 pandemic, saying people should resume normal payments on January 1, 2023.
However, the president decided to extend the moratorium until the summer, when the Supreme Court’s term expires and it must have an opinion on the case.
Since the program launched, 26 million borrowers have applied for the waiver, despite limbo status.
The Supreme Court by a conservative 6-to-3 majority will hear arguments Tuesday after six Republican states filed legal challenges claiming the order was too broad in scope and claiming the plan would hurt states financially
The White House continues to maintain that its approach is legally sound.
The administration’s legal filing with the Supreme Court notes that Biden’s guidelines to Secretary Cardona “are well within the plain text of the law.”
The six states filing the lawsuit are Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina.
They dispute that the states would be financially harmed if the federal government continued to write off billions in student loan debt.
Aside from the forgiveness, those in education worry that it will be difficult for people to resume these payments after years of not factoring them into their monthly bills.
DOE Federal Student Aid chief operating officer Richard Cordray said it would be a “psychological hurdle.”
Speaking at a conference in September 2021, he said: “We can expect a great many borrowers not to be eager to pay back if they have been led to believe or even hope that it would never happen.”
Of the 45 million student loan borrowers in the US, the White House estimates that nearly 90 percent would qualify for some relief. It also notes that 18 million would likely have their debts forgiven in full.