Millions of borrowers will be impacted by the Supreme Court’s upcoming decision on a case around President Biden’s student loan forgiveness program.
Over 18% of Wake Forest students receive federal student loans, averaging $6,135 per year.
At the end of February, the Supreme Court heard oral arguments for a monumental case regarding President Biden’s student loan forgiveness plan. Thirty-seven million borrowers would receive some type of forgiveness under Biden’s plan. This decision has the potential to block loan forgiveness, preventing Biden from following through on one of his key campaign promises.
Last August, Biden announced a debt relief program that would forgive up to $20,000 in student loans for qualifying borrowers. This plan came after student loan payments had been suspended by former Secretary of Education Betsy DeVos for nearly two years because of COVID-19.
Both DeVos and Biden’s actions rested on the HEROES Act, a law passed after the September 11th attacks that gives the executive expanded power in response to a “national emergency.”
Two challenges are currently before the Court: one from six states (Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina) with Republican attorneys generals and the other from two student loan borrowers who were not eligible for relief under Biden’s plan.
The first challenge occupied most of the Court’s time. The Court spent its time on two main issues.
The first was the clarity of the language in the HEROES Act. The Act permits the secretary of education to “waive or modify any statutory or regulatory provisions” in response to a national emergency. Chief Justice Roberts raised the point that this specific modification impacts 43 million Americans and costs half a trillion dollars. He asked if this is too expansive to be considered merely a “modification” and where that line should be drawn.
All the conservative justices seemed to be in agreement about the lack of clarity in the language of the HEROES Act. Conversely, Justice Kagan, with the two other liberal justices, believes “Congress could not have made [the Act] much more clear.” We can certainly expect to see the language of the HEROES Act be a deciding factor in this case.
The second issue is whether the major-questions doctrine applies to student loan forgiveness. The major-questions doctrine requires Congress to be very clear when giving the executive power to make “decisions of vast economic and political significance.” Justice Roberts strongly argued that the major-questions doctrine applied in this scenario. If the major-questions doctrine is applied in this case, the clarity of the Act becomes incredibly important.
The second challenge came from two individuals not eligible for full relief under Biden’s program. One challenger was eligible for no relief, while the other was only eligible for $10,000 in relief. They argued that Biden did not follow the procedural requirements that normally apply to federal agencies, which prevented them from advocating for a different program.
The liberal justices raised questions about the challengers’ standing to bring this case before the Court in an attempt to get the case dismissed.
The Court’s conservative justices raised questions about the fairness of the student loan forgiveness program. Since college graduates are typically better off financially, is this the best use of the government’s money? Should the government focus on business loans over student loans?
The Wake Report will provide an update when we receive a decision by late June.