Supreme Court set to rule on Biden’s student debt relief plan on Friday

WASHINGTON — The Supreme Court is set to hand down a long-awaited ruling on Friday that will determine whether President Joe Biden’s long-delayed plan to forgive student loan debt can go ahead.

The program, which would allow eligible borrowers to forgive up to $20,000 in debt and estimated to cost more than $400 billion, has been stalled since the U.S. 8th Circuit Court of Appeals ruled a temporary suspension in October. About 43 million people are eligible to participate.

The administration estimated that the program would erase all federal student loan debt for about 20 million people.

The Supreme Court will rule on the last day of its nine-month term, a day after conservative justices voted to end the systematic consideration of race in college admissions. The court has another case to decide, namely whether a Christian web designer can refuse to work on same-sex marriages.

The student loan proposal is politically significant for Biden, as tackling student loan debt was a key pledge he made on the campaign trail in 2020 to energize young voters.

But with a predominantly conservative Supreme Court suspicious of broad assertions of executive power, Biden’s plan faces a significant hurdle. During oral arguments in February, the conservative justices expressed skepticism that the administration could authorize such relief without explicit authorization from Congress.

Regardless of court rulings, the student loan repayment process is expected to resume at the end of August after being paused during the Covid-19 pandemic, although the first installments will not be due until October.

The court is considering two cases: one brought by six states, including Missouri, and the other brought by two people who hold student loan debt, Myra Brown and Alexander Taylor.

The challengers argued that the administration’s proposal — announced by Biden in August and originally slated to take effect last fall — violates the Constitution and federal law, in part because it bypasses Congress, which, according to them, had the exclusive power to create laws relating to the cancellation of student loans. .

In defending the plan, the Biden administration cited a 2003 law called the Higher Education Relief Opportunities for Students Act, or HEROES Act, which says the government can provide aid to student loan recipients in the event of a “national emergency.” , which allows him to act to ensure that people are not in a “bad financial situation” as a result of the emergency.

The challengers said the wording of the HEROES Act was not specific enough to authorize a proposal as broad as Biden’s plan.

Biden had offered to forgive student loan debt during the 2020 presidential election campaign.

The administration eventually offered to forgive up to $10,000 of debt for borrowers earning less than $125,000 a year (or couples who file taxes jointly and earn less than $250,000 a year). Pell grant recipients, who make up the majority of borrowers, would be eligible for an additional $10,000 in debt relief.

The administration closed the application process after the plan was blocked. Student loan holders currently do not have to make payments under the Covid relief measures which will remain in place until the Supreme Court issues its ruling.

The nonpartisan Congressional Budget Office estimated in September that Biden’s plan would cost $400 billion.

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