Biden’s $400 BILLION student loan relief plan is set for Supreme Court showdown

The final step in President Joe Biden’s efforts to forgive thousands of student loans for most borrowers will be at stake as the Supreme Court hears arguments Tuesday.

After a series of legal challenges, including from six red states, the nine justices will hear arguments in favor of Biden’s plan to eliminate up to $20,000 in federal student loan debt, which could cost taxpayers up to $400 billion.

The plan, which Biden announced in August, would forgive $10,000 in student loans for people making less than $125,000 and married couples making less than $250,000 combined. That forgiveness would go up to $20,000 if the borrower received a Pell Grant, which helps students from low-income families.

A Supreme Court ruling puts more at stake than student loans. If the nation’s highest court rules that Biden’s executive action is unconstitutional, it could give more power to legal challenges by states against federal policymaking.

Republicans immediately denounced Biden’s order as unfair to those who didn’t go to college and would need to help pay taxes for the forgiveness plan, or to those who already paid off their loans or never took out loans.

On the other hand, some activists said the plan didn’t go far enough, saying all student loan debt should be wiped out.

Six Republican-led states challenged President Biden’s proposal, claiming the administrative process needed to go through a proper comment and response period and also claiming it was an overreach.

The 6-3 conservative majority will have the final say on the matter after it has worked its way through the court system.

Biden’s legal basis for trying to cancel a portion of student debt is a 2003 law known as the Higher Education Opportunity Relief for Students Act, better known as the HEROES Act.

Implemented after the terrorist attack on September 11, 2001, the law was intended to prevent service members from becoming financially worse off while deployed in Afghanistan and Iraq.

Now extended, the law allows the Secretary of Education, Miguel Cardona, to grant relief in times of national emergency, in this case, COVID-19.

The White House argues that ending the national emergency does not change its legal position to pay off student loan debt because COVID-19 affected millions of borrowers who may have fallen behind on their loans during the pandemic.

‘Can Biden tell the country that the pandemic is over, and then you argue before the judges today that this is a current and ongoing national crisis?’ CNN’s Poppy Harlow asked Education Secretary Miguel Cardona on Tuesday morning.

‘Yes, we can,’ he replied.

“The economic impact of the pandemic is still real,” he said, insisting that the pandemic was over. “We are trying to help people recover.”

According to their legal brief, the states argue that the proposal seeks “impressive and transformative power” by relying on “a tenuous and pretextual connection to a national emergency.”

Student loan borrowers have been caught up in a year of uncertainty.

Biden’s pardon announcement in August also came with him declaring the latest student loan deferment extension due to the COVID-19 pandemic, saying people would have to resume regular payments on January 1, 2023.

The president, however, decided to extend the moratorium until the summer, when the Supreme Court’s term normally ends, and an opinion on the case must be issued.

Since the program launched, 26 million borrowers have applied for relief despite their state of limbo.

Students and advocates gather outside the White House as Biden’s student debt cancellation plan is being challenged in the nation’s highest court.

Rep. Sheila Jackson Lee (D-Texas) speaks as student loan borrowers and advocates gather in front of the Supreme Court, which will hear arguments to cancel portions of federal student loan debt.

The 6-3 conservative-majority Supreme Court will hear arguments on Tuesday after six red states launched legal challenges alleging the order was an overreach and claiming the plan would hurt the states financially.

The White House continues to insist that its approach is legally sound.

The administration’s legal filing with the Supreme Court notes that Biden’s directives to Secretary Cardona “comfortably fit the plain text of the law.”

The six states suing are Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina.

The argument: States would be hurt financially if the federal government goes ahead with canceling billions in student loan debt.

In addition to forgiveness, those in education worry that it will be difficult for people to get these payments back after years of debt suspension.

The director of operations for the DOE’s Federal Student Aid, Richard Cordray, said it would be a “psychological roadblock.”

Speaking at a conference in September 2021, he said: “We can hope that many, many borrowers will not be eager to repay when they have been led to believe, or even hope, that it was never going to happen.”

Of the 45 million student loan borrowers in the US, the White House estimates that nearly 90 percent would qualify for some relief. It also notes that 18 million would likely have their debts fully forgiven.

Activists and students protest in front of the Supreme Court during a student debt cancellation rally in Washington, DC, on February 28, 2023.