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 in June.
Biden’s program would offer up to $20,000 in debt relief to millions of eligible borrowers, but it has been met with legal challenges since it was announced.
Almost two weeks ago, the Biden administration began notifying people who are approved for federal student loans. About 26 million people had already applied for the program when it was frozen, prompting the government to stop accepting applications. No debt has so far been written off.
In the present case before the Supreme Court, a district court rejected a challenge brought by a group of states, holding that they could not prove the legal harm necessary to mount the challenge. In November, the 8th US Circuit Court of Appeals reversed and blocked the program.
A “flawed injunction” by a federal appeals court, Solicitor General Elizabeth Prelogar told the Supreme Court, “leaves millions of financially 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 Biden acted to address the financial damage of the pandemic and “smooth the transition to repayment” to provide targeted debt relief to certain federal student loan borrowers affected by the pandemic.
The program is designed to help borrowers who are most at risk of delinquency or default. Once debt relief begins, the plan can offer up to $10,000 in student loan debt relief to eligible borrowers earning less than $125,000 ($250,000 per household).
In addition, borrowers who received a Pell grant can receive up to $20,000 in emergency assistance.
When the Covid-19 pandemic began, the Ministry of Education suspended payments and accrual of interest on student loans to help those who were struggling financially. Those payments were supposed 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 faced multiple legal attacks.
As things stand, the payment break will last until 60 days after the loan forgiveness program case is resolved. If the program has not been implemented and the lawsuit is not 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 rules for notice and comment.
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, attorneys for the states of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina told the judges that the program should remain on hold, especially because the Biden administration has announced an extension of the payment pause until 2023.
Nebraska Attorney General Douglas J. Peterson told the judges that Biden’s debt relief program is an “illegal attempt to erase over $400 billion of the $1.6 trillion in federal student loan debt and eliminate all remaining loan balances for about 20 million of 43 million borrowers.”
In a separate challenge, the 5th U.S. Circuit U.S. Court of Appeals refused Wednesday night to lift a stay imposed by a district judge blocking the program.
That challenge has been brought by two individual borrowers — Myra Brown and Alexander Taylor — who do not qualify for full debt forgiveness and who say they were denied an opportunity to comment on the Education Secretary’s decision to provide targeted student loan debt relief to some.
This story has been updated with additional details.