Student Loans Go Before the Supreme Court

On February 28, 2023, the Supreme Court of the United States will hear oral arguments on two separate cases, both of which challenge President Biden’s loan forgiveness program. As announced in August 2022, Biden’s Program would forgive $10,000 of student debt for individuals making less than $125,000 per year or married couples making less than $250,000 per year. Additionally, Pell Grant recipients could get an additional $10,000 in loan forgiveness.

President Biden’s authority to do so rests in the Higher Education Relief Opportunities for Students Act, commonly referred to as the HEROES Act. The Act, initially enacted following the terrorist attacks of September 11, 2001, allows the government to waive and modify student loan payments in the event of a national emergency, including the COVID-19 pandemic.

The first case, Biden v. Nebraska, was initiated by six states, which challenged Biden’s authority to grant such debt relief. The States challenged the Biden administration’s authority to use the HEROES Act to waive debt in such a large scope. They also claim the States will receive less tax revenue from the loss of student loans. The district court dismissed the case due to the States’ lack of standing, meaning the court did not think the States had a legal basis to bring their claims. The States appealed to the Eighth Circuit, which stayed (put on hold) the loan forgiveness program pending the appeal. The Biden administration appealed to the US Supreme Court, which agreed to hear arguments on the case.

The second case, Department of Education v. Brown, was filed by two individuals who are ineligible to take full benefit of Biden’s plan. One individual has privately held student loans, and the other, having not received a Pell Grant, cannot fully benefit. They argue the forgiveness program is arbitrary and unfair. They also claim the Biden administration failed to follow the proper procedures to use the HEROES Act. The district agreed with the plaintiffs and declared the loan forgiveness program unlawful. The Biden administration quickly appealed the decision and requested the order be stayed until their appeal could be heard. The Fifth Circuit denied the request forcing the Biden administration to appeal to the US Supreme Court, which agreed to hear the case.

While the Supreme Court will address issues related to the Biden administration’s authority, the States’ standing, and the procedural aspects of the forgiveness program, the American public is primarily concerned with the impact these cases will have on their student loan payments. Over 43 million Americans have student loan debt, totaling approximately $1.63 trillion.

Biden’s loan forgiveness program would eliminate roughly $430 billion in student debt and offer relief to over 40 million loan borrowers. With student loan payments set to resume this June, and many Americans still recovering from the effects of the pandemic, a reduction in student loan debt would be a much-welcome relief to borrowers should Biden’s plan be allowed to proceed.