- By Sam Cabral
- BBC News, Washington, DC
Conservative Supreme Court justices have questioned the legality of the Biden administration’s proposal to write off billions in student debt.
President Joe Biden announced the plan – a discount of up to $10,000 (£8,310) per borrower and $20,000 in some cases – last year, but lower courts blocked it.
Millions of borrowers are in limbo as the country’s Supreme Court deliberates over a pair of legal challenges.
The decision could affect the loans of more than 40 million Americans.
That includes, according to White House estimates, nearly 20 million people whose student loan balances could be forgiven entirely.
The Supreme Court, which has a 6-3 Conservative majority, will make its final decision on cases in June.
The Biden administration says that under a 2003 law known as the Student Relief Opportunities Act or the Heroes Act, it has the authority to “waive or alter” loan provisions to protect borrowers affected by “war or other military operations or emergencies.”
In oral arguments on Tuesday, government attorneys pressed for this expansive interpretation of the law.
We are talking about half a trillion dollars and 43 million Americans. How does this fit into a normal understanding of price? Chief Justice John Roberts asked US Attorney Elizabeth Prilogar.
Ms. Prelogar responded that, in a given context, the “adjustment” may require sweeping changes to protect borrowers. She added that the management was not seeking to assert a supervisory authority but to implement a Mazaya program.
Without the plan in place, she said, “defaults and late payments will increase.”
The two issues in the court’s schedule depend on whether the competitors in the loan forgiveness program can prove that they would be harmed by the program. If so, they would have the legal right to sue and prevent the implementation of the plan in its current form.
The first case is a challenge from six Republican-led states, including Missouri.
In the first lawsuit, plaintiffs argue that Missouri’s federal loan service — the Missouri Higher Education Loan Authority (Mohila) — will suffer financially because it will not receive millions of dollars in fees for loans canceled by the program.
Judge Elena Kagan asked why the lawsuit was not filed by Mohyla but by the states.
The second suit involves two student borrowers, Myra Brown and Alexander Taylor. Brown was not eligible for a pardon, while Mr. Taylor was not eligible for the $20,000 maximum.
Conservative justices have focused on whether it is appropriate for some Americans to get debt relief but not others, with Justice Samuel Alito asking, “Why is it fair? Why is it fair to people who have not been given a similar discount?”
But the court’s liberal judges rejected it. “Different people received different benefits because they were eligible under different programs,” Judge Sonia Sotomayor noted, while Kitangi Brown Jackson, a Biden appointee, claimed that “the same stock issue will arise with respect to all federal benefit programs.”
Student loan payments were initially suspended under the Trump administration in 2020 due to the coronavirus pandemic.
Biden continued this pause until he decided in August to forgive more than $400 billion in debt — up to $10,000 for anyone earning less than $125,000 and up to $20,000 for students receiving Pell grants on a need basis.
The White House estimates that nearly 90% of student borrowers nationwide qualify for relief under its plan, and that about 26 million people have already applied for forgiveness. But relief is pending as legal challenges to the plan progress through the courts.
Ahead of the hearing, hundreds of activists braved the cold and rain to take part in rallies outside the Supreme Court in Washington, D.C., on Monday and Tuesday.
They were joined by some of the most outspoken figures in the Democratic Party on student debt. Rep. Ayanna Pressley said opponents of rescinding loans “have nothing to do with the suffering of ordinary people,” while Sen. Elizabeth Warren warned that the “extreme Court” could miss an opportunity to “build a more secure future.”
When is the student loan repayment resumed?
The White House has not indicated what it will do if the justices drop his motion. On Monday, Biden said he was “confident that the legal authority to implement this plan exists. I promise: I will support you.”
If the court overturns the plan, it will likely force the administration to go back to the drawing board so it can try again with a modified proposal, which could take months. Even if the court sided with the government, more legal challenges could be filed.
This means that time is running out for many borrowers. Loan repayments are suspended while the country’s pandemic emergency measures remain in place, but if debt relief challenges are not resolved by the end of June, payments will resume after 60 days.