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Biden's Student Loan Forgiveness Plan Reaches the Supreme Court. Here's What's at Stake

Demonstrators calling on Biden to cancel all student loan debt.
Demonstrators outside the White House in July call on President Biden to cancel all student loan debt.
Jemal Countess/Getty Images

What's happening

The Supreme Court is hearing oral arguments Tuesday in two challenges to the Biden Administration's student debt relief plan.

Why it matters

One in five Americans has outstanding education loans, with an average amount of more than $37,000.

The Supreme Court is hearing oral arguments Tuesday in a pair of lawsuits challenging President Joe Biden's student debt forgiveness plan, which would cancel up to $10,000 in federal loans for eligible borrowers, with an additional $10,000 for Pell Grants recipients.

Outstanding student loans topped $1.75 trillion in 2022, making them the second largest form of consumer debt in the US after home mortgages. The White House says its plan could wipe out the balances of nearly 45% of the 45 million Americans still paying off education loans.

"This means people can start to finally crawl out from under that mountain of debt," Biden said while announcing the program.

According to an Economist/YouGov poll, 51% of Americans support the debt forgiveness plan. But it has met with opposition from Republicans in Congress, who cite concerns it could cost as much as $330 billion over the next 10 years.

How did the student loan forgiveness plan get before the Supreme Court?

Passed in the wake of 9/11, the 2003 Higher Education Relief Opportunities for Students Act (PDF) grants the Department of Education the discretion to waive student loan repayments for those impacted by "a war or other military operation or national emergency."

The Biden administration argues that its plan falls under the HEROES Act, as Americans have been grappling with the economic fallout of the pandemic and ensuing inflation.

Opinions are divided, though. Former Democratic Rep. George Miller, who helped draft the HEROES Act, says Biden's strategy is "clearly authorized" by the legislation.

Read on: Why You Should Consider Making Payments During the Student Loan Pause

"We wanted to make sure that federal student-aid recipients who are affected by national emergencies 'are not placed in a worse position financially in relation to that financial assistance' because of the emergency," Miller wrote in a Feb. 22 Washington Post opinion piece. "And we thought the education secretary would be in the best position to determine how best to effectuate that goal." 

Others disagree: Republicans John Boehner, John Kline and Buck McKeon -- former House members and architects of the HEROES Act alongside Miller -- filed an amicus brief (PDF) telling the high court that "Congress never intended anything like the loan cancellation effort underway here."

Two lawsuits were filed after the president laid out his plan in August, both of which argued Education Secretary Miguel Cardona exceeded his authority in authorizing the debt erasure.

Biden v. Nebraska: On Sept. 29, Republican attorneys general in six states -- Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina -- filed a challenge that argued the forgiveness program could harm state tax revenues and diminish investments tied to student loans.

Department of Education v. Brown: On Oct. 10, the Job Creators Network Foundation filed a separate lawsuit in Texas on behalf of two student-loan borrowers, Myra Brown and Alexander Taylor. They argue the Biden administration failed to allow for the traditional "notice and comment" period for a proposed rule when it rolled out its debt-forgiveness plan.

Both cases quickly worked their way through the lower courts and, until the justices issue their ruling, an injunction is in place blocking the plan from moving forward.

How could the Supreme Court rule on student loan debt?

In both cases, the court must determine:

  • whether the challengers have standing, or the right to sue
  • whether their complaints have merit

If the Supreme Court rules on standing: The Biden administration argues neither litigant has standing, meaning they can't prove they are being harmed by the loan forgiveness plan or that the judiciary can remedy the situation. If the Supreme Court sides with the administration, the cases would be dismissed.

The door would be open for other challenges, but according to student loan expert Mark Kantrowitz, it would be hard to reverse course and reinstate borrowers' loan debts after the Department of Education began processing applications.

"They've already approved 16 million of the 26 million applications they've received," Kantrowitz told CNET. "All that's left to do is notify loan servicers and implementation normally takes one to two weeks. It won't be the day of the ruling, but it will happen quickly."

If the Supreme Court rules on merit: If the justices grant the challengers standing in either case, they will then dive into the question of whether the Department of Education is within its rights to erase millions of Americans' student loan debts.

Based on recent rulings, Kantrowitz said, it doesn't look good for the federal government.

"If they rule on the merits, I think there's more than a 50-50 chance that the court will rule against the Biden administration," Kantrowitz said. "It really is an expansive reading of the law that goes beyond any precedent or established authority."

Read on: What I'm Doing with My $6,000 Student Loan Refund

When could the Supreme Court give its opinion on student loan debt forgiveness?

The justices are set to hear oral arguments in the two cases on Feb. 28. There is no preset schedule for Supreme Court opinions, though the court often releases major decisions in late June, right before the summer recess. 

While the justices hash it all out, federal student loan payments are currently paused. The White House has said payments and interest will resume either 60 days after the Supreme Court makes its ruling or 60 days after June 30, 2023, whichever comes first.

That means that payments could restart as early as May 2023 or as late as Sept. 1.

For more on student loans, find out when payments and interest will resume and how to find out who your student loan provider is.