The Supreme Court said Thursday that President Joe Biden’s student loan debt forgiveness program will remain blocked for now, but the justices agreed to hear oral arguments in the case in February, with a decision expected by June.
Biden’s program would offer up to $20,000 of debt relief to millions of qualified borrowers, but it has been met with legal challenges since it was announced.
Nearly two weeks ago, the Biden administration began notifying people who are approved for federal student loan relief. About 26 million people had already applied to the program by the time it was frozen prompting the government to stop taking applications. No debt has been canceled thus far.
In the case at hand before the Supreme Court, a district court dismissed a challenge brought by a group of states, holding that they couldn’t prove the legal injury necessary to bring the challenge. In November, the 8th US Circuit Court of Appeals reversed and blocked the program.
An “erroneous injunction” from a federal appeals court, Solicitor General Elizabeth Prelogar told the Supreme Court, “leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations.”
She said that Biden acted in order to address the financial harms of the pandemic and “smooth the transition to repayment” in order to provide targeted debt relief to certain federal student-loan borrowers affected by the pandemic.
The program is designed to aid borrowers who are at highest risk of delinquency or default. Once debt cancellation begins, the plan could offer up to $10,000 in student loan debt relief to eligible borrowers making less than $125,000 ($250,000 per household.)
In addition, borrowers who received a Pell grant can receive up to $20,000 in relief.
As the Covid-19 pandemic began, the Department of Education paused payments and accrual of interest on student loans to help those who were struggling financially. Those payments were set to resume in January, but last week the Biden administration issued an extension due to the fact that his loan forgiveness program – announced in August – had come under multiple legal attacks.
As things stand, the payment pause will last until 60 days after the litigation over the loan forgiveness program is resolved. If the program has not been implemented and the litigation has not been resolved by June 30, payments will resume 60 days after that, according to the government.
The authority exists under the Higher Education Relief Opportunities for Students Act of 2003, or the HEROES Act, the administration argued. It said the law exempts the government from otherwise applicable procedural requirements, including notice-and-comment rulemaking.
A group of states, led by Nebraska, challenged the Biden policy, arguing that it violates the separation of powers and the Administrative Procedure Act, a federal law that governs the process by which federal agencies issue regulations.
In court papers lawyers for the states, Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina told the justices the program should remain on pause, especially because the Biden administration has announced an extension of the payment pause until 2023.
Nebraska Attorney General Douglas J. Peterson told the justices that Biden’s debt relief program is an “unlawful attempt to erase over $400 billion of the 1.6 trillion in federal student loan debt and eliminate all remaining loan balances for roughly 20 million of 43 million borrowers.”
In a separate challenge, the 5th US Circuit US Court of Appeals on Wednesday night refused to lift a stay put in place by a district court judge blocking the program.
That challenge is brought by two individual borrowers – Myra Brown and Alexander Taylor – who are not qualified for full debt relief forgiveness and who say they were denied an opportunity to comment on the secretary of education’s decision to provided targeted student loan debt relief to some.
This story has been updated with additional details.