Biden's Student Loan Forgiveness Plan Is Going to the Supreme Court in Spring 2023

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President Joe Biden, flanked by Education Secretary Miguel Cardona, delivers an update on the student debt relief portal beta test in the Eisenhower Executive Office Building, in Washington, DC, on Oct. 17, 2022. (Demetrius Freeman/The Washington Post via Getty Images)

The Supreme Court agreed Thursday to consider whether the Biden administration can broadly cancel student loans, a move that keeps the program blocked for now but signals a final answer could come by early summer.

That's about two months before the newly extended pause on loan repayments is set to expire.

The administration had wanted a court order that would have allowed the program to take effect even as legal challenges proceed. The justices didn't do that, but agreed to the administration's fallback, setting arguments for late February or early March over whether the program is legal.

President Joe Biden’s plan promises $10,000 in federal student debt forgiveness to those with incomes of less than $125,000, or households earning less than $250,000. Pell grant recipients, who typically demonstrate more financial need, are eligible for an additional $10,000 in relief.

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The Congressional Budget Office has said the program will cost about $400 billion over the next three decades.

More than 26 million people have already applied for the relief, with 16 million approved, but the U.S. Department of Education stopped processing applications last month after a federal judge in Texas struck down the plan.

What are the court cases blocking the student debt relief program?

The Texas case is one of two in which federal judges have forbidden the administration from implementing the loan cancellations.

In a separate lawsuit filed by six states, a three-judge panel of the 8th U.S. Circuit Court of Appeals in St. Louis also put the plan on hold. That's the case that will now go before the Supreme Court.

The moratorium on student loan payments had been slated to expire Jan. 1, a date Biden set before his debt cancellation plan stalled in the face of legal challenges from conservative opponents.

The new expiration date is 60 days after the legal issue has been settled, but no later than the end of August.

Challenges to the plan were brought by conservative attorneys, Republican lawmakers and business-oriented groups who have asserted Biden overstepped his authority in taking such sweeping action without the assent of Congress. They called it an unfair government giveaway for relatively affluent people at the expense of taxpayers who didn’t pursue higher education.

Missouri Attorney General Eric Schmitt, a Republican, said in a statement following the high court order that the Biden plan “would saddle Americans who didn’t take out loans or already paid theirs off with even more economic woes.” Missouri is one of the six states that sued to block the plan, along with Arkansas, Iowa, Kansas, Nebraska and South Carolina.

The program's path to the Supreme Court

The Biden administration has argued that the loan cancellations are legal under a 2003 law aimed at providing help to members of the military. The program is a response to “a devastating pandemic with student loan relief designed to protect vulnerable borrowers from delinquency and default,” the Justice Department said in court papers.

The law, the HEROES Act, allows the secretary of education to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs ... as the Secretary deems necessary in connection with a war or other military operation or national emergency.”

In putting the program on hold, the 8th Circuit panel said there was little harm to borrowers because repayments have been suspended. Allowing the cancellations to proceed before a definitive court ruling would have had an “irreversible impact,” the appeals court said.

U.S. District Judge Mark Pittman, an appointee of former President Donald Trump, issued a more sweeping ruling in the Texas case, finding that such a costly program required clear congressional authorization.


What about the pause on student loan repayments?

In March 2020, the Trump administration temporarily paused student loan payments and set interest rates to 0% for eligible federal student loans in response to the COVID pandemic. Biden subsequently extended that moratorium several times, most recently to Jan. 1, 2023.

But Biden set that date before his debt cancellation plan stalled in the face of legal challenges from conservative opponents.

Now, the pause on student loan repayments will extend until 60 days after the lawsuit is resolved. If the lawsuit has not been resolved by June 30, payments would resume 60 days after that.

"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," Biden said in a video posted on Twitter.

The Department of Education says that they "will notify borrowers before payments restart."

What happens if I've already applied for the student debt relief program?

If you already applied online for the White House's student debt relief program, the Department of Education's federal student aid website says "we'll hold your application."

The program is not currently accepting new applications because of the court orders, but the site allows users to sign up for updates.

This story contains reporting by The Associated Press' Chris Megerian and KQED's Carly Severn.