The Supreme Court announced on Thursday that it would hear full oral arguments on an accelerated basis rather than making a ruling on whether to approve President Joe Biden’s request to put into effect his student loan forgiveness proposal.
The court announced in a brief order that it would hear arguments in February and issue a ruling shortly after. The plan is still prohibited in the interim.
On behalf of the Biden administration, Solicitor General Elizabeth Prelogar submitted an emergency appeal on November 18 requesting the justices to lift an injunction issued by the 8th U.S. Circuit Court of Appeals, which is situated in St. Louis. A federal judge in Texas also disallowed the scheme in a different instance. The administration may soon take the case to the Supreme Court after the 5th U.S. Circuit Court of Appeals declined to lift that stay on it on Wednesday.
Prelogar said the 8th Circuit’s decision “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.”
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The idea has been contested by a number of individuals and organizations, and the Supreme Court is currently hearing claims from six states: Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina. 17 additional states have joined the states’ complaint.
The appeals court disagreed with a federal judge who had determined that the states lacked legal standing to bring the complaint, focusing on a Missouri organization that administers federal student loans. The state contends that the agency would suffer a revenue loss if debts were forgiven.
In court papers, the states’ lawyers said the administration was using the Covid pandemic as “a pretext to mask the president’s true goal of fulfilling his campaign promise to erase student loan debt.”
The requirement to demonstrate legal standing to sue by explaining how the programme has injured them is a significant barrier for individuals contesting the programme.
The administration would likely face an uphill battle even if the Supreme Court decided the states had standing and then addressed whether Biden had the authority to forgive the loans. This is because the court’s conservative majority is skeptical of broad assertions of federal power. For instance, the court rejected Biden’s proposal to mandate Covid immunisation or testing for larger employers in January.
Since the 8th Circuit placed a temporary stay on the programme in October, qualified debtors have been unable to cancel up to $20,000 in debt. Since then, the application procedure has been closed by the administration. On Thursday, the White House expressed excitement for the oral arguments in February.
“We welcome the Supreme Court’s decision to hear the case on our student debt relief plan for middle and working-class borrowers this February,” White House press secretary Karine Jean-Pierre said in a statement, calling the program “legal, supported by careful analysis from administration lawyers.”
Borrowers are not currently required to make payments under another Covid-related presidential decree. Payments will resume at the end of August if there is no resolution by late June. The administration prolonged the repayment pause from November 22 to the end of June or until the case is concluded, whichever comes first.
“As we previously announced, student loan payments will remain paused while the Supreme Court resolves the case,” Jean-Pierre said Thursday.
The challengers argued that the administration’s plan — announced by Biden in August and originally set to take effect this fall — 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 cancel up to $10,000 in debt for borrowers earning less than $125,000 a year (or couples who file taxes jointly and earn less than $250,000 annually). Pell Grant recipients, who are the majority of borrowers, would be eligible for an additional $10,000 in debt relief. The overall program is anticipated to help more than 40 million borrowers, the administration has said.
In September, the nonpartisan Congressional Budget Office estimated that Biden’s plan would cost $400 billion, while the Education Department said the price tag would be closer to $379 billion.