Supreme Court delays decision on Biden's student loan forgiveness plan

The Supreme Court has delayed its decision on whether to grant President Joe Biden's plan to implement his student loan forgiveness plan or not, instead announcing that it will hear full oral arguments on an expedited basis.

The court said in a brief order that it would hear arguments in February, with a decision soon to be made. The plan is blocked in the meantime.

Solicitor General Elizabeth Prelogar filed an emergency application on behalf of the Biden administration on November 18, asking the justices to lift an injunction imposed by the St. Louis-based 8th U.S. Circuit Court of Appeals. A federal judge in Texas blocked the plan in a separate case. The Circuit Court of Appeals refused to lift that hold, meaning that the administration could appeal that case to the Supreme Court soon.

Prelogar said that the 8th Circuit decision leaves millions of economically vulnerable borrowers in limbo, uncertain about their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations. Various individuals and groups have challenged the proposal, with the case now being challenged by the Supreme Court involving claims brought by six states: Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. The states' lawsuit is backed by 17 other states.

A federal judge had ruled that the states did not have legal standing to pursue the lawsuit, but the appeals court disagreed, focusing on a Missouri agency that serves federal student loans. The agency would lose revenue if loans were forgiven, according to the state.

The states lawyers said in court papers that the administration was using the Covid epidemic to mask the president's true goal of eradicating student loan debt. The challenge for those challenging the program is that they have to show legal standing to sue by illustrating how they are harmed by the program. Even if the Supreme Court were to conclude that the states did have standing and then reach the legal question of whether Biden had the authority to forgive the loans, the administration would face an uphill battle with the conservative majority skeptical of broad assertions of federal power. In January the court blocked Biden's Covid vaccine or test requirement for larger businesses.

The program, which allows eligible borrowers to cancel up to $20,000 in debt, has been blocked by the 8th Circuit since it issued a temporary hold in October. The application process has been closed by the administration.

Under a different Covid-related presidential order, borrowers don't have to make payments. The repayment pause would be extended until the end of June or until the litigation is resolved, or until the end of August if there is no resolution by late June.

The administration's plan, announced by Biden in August and originally set to take effect this fall, is alleged by the challengers as it violates the Constitution and federal law, partly because it circumvents Congress, which they said has the power to create laws related to student loan forgiveness.

Biden's program would provide up to $10,000 in debt cancellation for borrowers with less than $125,000 a year or couples who file taxes jointly and earn less than $250,000 annually. Pell Grant recipients, who comprise the majority of their borrowers, would be eligible for additional $10,000 in debt relief. The administration said the overall program is expected to help more than 40 million borrowers.

The nonpartisan Congressional Budget Office estimated in September that Biden's plan would cost $400 billion, while the Education Department said the price tag would be closer to $379 billion.