Student Debt Relief Faces a 'Thorny' Battle in the Supreme Court, According to This Lawyer

The Biden administration has a few options if forgiveness is blocked. Here's how borrowers should prepare.

Marcos Cabello
Based in Boston, Marcos Cabello has been a personal finance reporter for NextAdvisor and CNET. Marcos has covered cryptocurrency, investing, banking, and the US economy, among other personal finance subjects. If you don't find Marcos behind his computer screen, you'll probably find him behind another screen, playing the newest Nintendo Switch title, streaming the latest TV show or reading a book on his Kindle.
Marcos Cabello
6 min read
student loan borrowers protesting student debt outside of the White House
The Washington Post via Getty; Design by Zooey Liao

In February, the Supreme Court is slated to make a decision on President Biden's student debt relief plan. With the administration facing an intense uphill legal battle, millions of borrowers are left wondering what's next. 

In August, the White House announced a plan that would forgive $10,000 (or $20,000 for Pell Grant recipients) in federal student loans for individuals earning less than $125,000 a year or married couples earning less than $250,000 a year combined. As nearly 43 million Americans have outstanding federal loan debt, Biden's plan will cost some $400 billion over 30 years, according to the nonpartisan Congressional Budget Office

Since then, there have been a flurry of lawsuits, as GOP-led states rushed to courts across the country in a bid to prevent the plan from taking effect. Two of those lawsuits have made their way to the Supreme Court, which agreed to take the cases, expedite them and hear oral arguments in late February or early March. It's unclear whether the Supreme Court will hear the cases separately or consolidate them.

One of those cases was jointly brought in Missouri by six GOP-led states (Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina). The other suit was filed in Texas by two student loan borrowers. In both cases, lower courts blocked the plan. Biden's plan must now survive a ruling by mostly conservative justices on the court in order to proceed. 

We spoke to Jay Fleischman, a student loan attorney and founder of Money Wise Law, to learn more about the legal challenges Biden's debt relief plan faces in court and the impact of potentially striking down the plan. We also got answers to what student loan borrowers should do while we await a decision.

Will the Supreme Court strike down student debt relief?

No one can say with certainty, but the Biden administration will need to overcome a host of arguments in both cases that challenge the legality of the program, which Fleischman said will be arduous. 

"We've seen the Supreme Court erring on the side of reducing the amount of authority that the executive branch has in these circumstances," he said. "I think that the administration may have some problems."

Biden's debt relief plan has already been deemed unconstitutional by some lower courts, and that has many people worried the same result may follow in the Supreme Court, which has a conservative majority.

Among the legal arguments, plaintiffs contend that the Department of Education didn't follow the proper procedure in creating the plan. Moreover, some challengers are arguing that the law the plan is based on -- the Health and Economic Recovery Omnibus Emergency Solutions Act (the Heroes Act) -- doesn't actually give the executive branch the authority to cancel student loans.

The Heroes Act was enacted by Congress a few months after the Sept. 11, 2001, attacks and gave the Secretary of Education the authority to "waive or modify any provision applicable to student financial assistance programs," to respond to conditions of war or national emergency, according to the statute

The Supreme Court has said that in matters of vast economic and political significance, the executive branch needs clear congressional authorization to exercise a legislative power -- and it doesn't have that authorization in this case, or so the argument goes. 

"This is called the 'major questions doctrine,'" Fleischman said, adding that the Supreme Court has started using this doctrine more in recent years. "Whether or not the administration's move under the Heroes Act was constitutionally allowable is where the thorny issues come into play."

Notably, the doctrine was used to strike down the federal government's COVID-19 vaccine mandate in 2021, which would've required private employers with 100 or more employees to ask for vaccination proof, said Fleischman. He also noted that It was used to strike down the CDC's nationwide temporary eviction moratorium

Still, there is one major issue plaguing the parties that have brought these lawsuits forward: establishing legal standing. To initiate a lawsuit, a party must show it is sufficiently affected by the matter at hand to establish standing, according to Fleischman, and that's a constitutional requirement.

"Standing is really just a question of whether or not you've got a vested interest in the outcome of the case, whether you're going to benefit or be harmed one way or the other," Fleischman said. The Missouri court where those six GOP-led states brought suit determined there was no standing and dismissed the case. 

In order for those opposing Biden's plan to prevail in the Supreme Court, they'll need to meet this constitutional requirement. But even if both cases before the court are dismissed for lack of standing, other lawsuits could still arise in the future.  

While Fleischman can't predict how the justices will rule on these two cases, there's not a freshly paved road for either side.

What's the impact of striking down student loan forgiveness?

The cost of higher education has steadily increased throughout the last two decades, and federal student loans comprise the majority of American education debt. Federal student loan borrowers owe nearly $38,000, on average, and striking down student loan forgiveness will disproportionately hurt Black borrowers and those who were more economically impacted by the COVID-19 pandemic.

Although white graduates hold 54% of all student debt, Black college graduates owe $25,000 more on average in student loans than white graduates, according to the Education Data Initiative.

With rising prices squeezing consumers at the grocery store, medical bills leaving people with little to no wiggle room in their budgets, a looming recession and an increase in layoffs across several sectors, money is definitely tighter than it was just a year ago. Even partial student loan forgiveness would help ease the pain of debt and higher prices. 

"I certainly wouldn't be surprised by an increase in the number of defaults," Fleischman said. "Even people who want to repay their loans according to the terms and conditions of repayment may have some significant problems in doing so."

Does the White House have other options if the Supreme Court strikes down the plan?


Chiefly, since the Heroes Act gives the executive branch the power to suspend student loan payments while we're in a state of national emergency (which we've been in since March 2020), Biden could extend the student loan payment pause indefinitely until the end of his term.

The Department of Education also could settle federal student loan debt of up to $100,000 per borrower under existing law -- and that figure could go even higher if the US Attorney General precribes a higher limit, according to Fleischman. The Department could also temporarily or indefinitely suspend loans for individuals who are unable to repay a significant amount of that debt.

If you're a borrower, you may have some other avenues for forgiveness, too, through newly revamped income-driven repayment plans or Public Service Loan Forgiveness. You can find more programs on the Federal Student Aid website

When will student loan payments resume?

At the earliest, student loan payments will resume 60 days after litigation is resolved, according to the Department of Education. If the Supreme Court rules on the case in February, payments could resume by the end of April. 

If litigation hasn't been resolved by June 30, 2023, payments are scheduled to resume 60 days after that, on Aug. 29, 2023. If Biden intervenes, however, payments may remain on pause even longer.

What should student loan borrowers do in the meantime?

Borrowers would be better off preparing to repay their debt in full and acting as if debt will not be forgiven. It's also wise to assume that payments will resume earlier rather than later, Fleischman said. 

"If forgiveness goes through, people who are going to get $10,000 or $20,000 wiped out know the end of that road," he said. "However, if cancellation doesn't go through, anybody who has failed to plan for that eventuality is going to find themselves in a really difficult position."  

You can begin preparing for repayment by updating your contact information on studentaid.gov, enrolling in income-driven repayment plans to help lower your monthly payment amount and contacting your loan service officer if you have questions about your balance.