What to know about the legal challenges of student loan forgiveness

Two of the legal challenges against the President Joe BidenStudent debt relief plan reached the US Supreme Court.

In August, Biden announced that tens of millions of Americans would be eligible to have their education debt forgiven: up to $20,000 if they received a Pell Grant in college, a type of aid available to low-income families, and up to $10,000 if they don’t get it. Individuals earning more than $125,000, or families earning more than $250,000, were excluded from the relief.

Since then, Republicans and conservative groups have filed at least six lawsuits to try to get rid of the policy, arguing that the president has no power to cancel consumer debt without Congress and the policy. This is harmful.

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The Biden administration insists it acts within the law, pointing out that the Heroes Act of 2003 gives the US secretary of education immunity from regulations related to student loans during national emergencies. . The country has been working Frienddeclare a state of emergency because Covid as of March 2020.

The battle has raged in the courts, and now nine US Supreme Court justices have scheduled their high-profile legal arguments over the plan. end of february.

Here’s what you need to know about the two cases that will be heard.

On September 29, six Republican-led states submitted lawsuit against the president’s student loan forgiveness plan, arguing that Biden has exceeded his powers. The states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — allege that debt relief “wasn’t remotely adjusted to address the pandemic’s impacts on federal student loan borrowers, required by the HEROES Act.”

However, the Biden administration insists that the public health crisis has caused significant financial damage to student loan borrowers and that debt forgiveness is necessary. to prevent a historical increase in delinquencies and defaults. It will likely emphasize this concern to the judges.

The GOP states also argued that loan forgiveness would disrupt their institutions that benefit from the defunct Federal Family Education Loan (FFEL) program. Under that program, which was scrapped in 2010, the government guaranteed loans to private banks and nonprofit lending institutions. Although the U.S. Department of Education has switched to a direct student loan system, millions of borrowers continue to owe commercially held FFEL loans.

States indicate that a major loan service provider based in Missouri, Missouri Higher Education Loan Agencyor MOHELA, will lose its planned revenue because the Biden administration initially told borrowers they could move their loans from the FFEL program to the federal primary loan program to qualify. debt is forgiven.

But the administration was quick to go ahead with this argument, issuing guidance in September that commercial FFEL borrowers can no longer consolidate their debt to qualify for its plan.

Higher education expert Mark Kantrowitz said that development has weakened the states’ argument.

“The possibility of loss of state budget revenue is not a constant concern,” he said.

Inside lawsuit10, the two plaintiffs said they were harmed by this operator’s “excessive and arbitrary approach,” according to an organization press release.

One plaintiff, Myra Brown, said she was not bailed out by the president because she had commercial loans. The other plaintiff, Alexander Taylor, said he wasn’t entitled to the maximum forgiveness amount of $20,000 because he didn’t receive a Pell Grant while in college.

The lawsuit says the president’s policy violated the Administrative Procedures Act’s notice and comment procedure, which does not allow plaintiffs to consider pardons.

In response, the Biden administration is likely to argue that the Heroes Act of 2003 gives the secretary of education the power to change federal student loan programs during a national emergency without consulting. of the public first, Kantrowitz said.

The Heroes Act “clearly waives the APA requirement for notice and comment periods,” he said.

“All the administration needed to do was publish the exemptions in the Federal Register, which they did,” he said.

The Biden administration has denied that its policy would harm the plaintiffs in the lawsuit, quarrel that, to the contrary, its plan “will cost Defendant Brown nothing and relieve Defendant Taylor of $10,000 in debt.”