President Biden calls on SCOTUS to rule on student loan debt relief

DELMARVA –  About 26 million Americans have been approved for student loan forgiveness, with 18 million already approved. But, that does not mean that forgiveness is guaranteed.

Legal Challenges Begin

Legal challenges to the Biden Administration’s promise to ease student loan debt for millions have only begun.

“One track is dealing with six states that disagreed with the pause, and sued. That has gone to the 8th Circuit Court of Appeals. It’s from there that the Biden Administration is requesting an appeal to the Supreme Court,”  said Professor of Political Science at Delaware State University, Dr. Samuel Hoff. “There’s another track that started with a Texas court disagreeing with the pause. The Biden Administration is requesting that to go to the 5th Circuit Court of Appeals.”

Where It Began

The topic of student loan debt forgiveness began in 2020, when the Trump Administration first issued an emergency freeze on the payments, says Dr. Hoff. Former President Donald Trump paused payments a total of three times. President Joe Biden extended the pause two more times, with the most recent extension marking the third.

In August of 2022, President Biden vowed to forgive certain borrowers’ debt, depending on their income and financial aid already received. Borrowers with an annual income of less than $125,000, or couples making less than $250,000 annually are eligible. Those who received Pell Grants could have up to $20,000 of student loan debt forgiven. Borrowers who did not receive a Pell Grant are eligible for up to $10,000 of debt relief.

In the meantime, student loan payments are paused until 60 days after the current court cases are resolved, according to the U.S. Department of Education. If the program has not been launched, and the litigation has not been settled by June 30th, payments will resume 60 days after that.

Calling on the SCOTUS

With the announcement of debt relief, came controversy and legal challenges. Now, President Biden is calling on the Supreme Court of the United States (SCOTUS) to step in. Dr. Hoff says to figure out which way the Justices will lean, we must look at their track record first.

“Justice Amy Coney Barrett has actually rejected two previous appeals to the court, one from each side. So, that doesn’t necessarily tell us what’s going to happen, and whether the Court will accept this appeal,” said Dr. Hoff. “Or, you could say that they will narrowly rule on the basis, by which the Biden Administration justified this action, which was the 2003 Heroes Act, which was meant to help the military.”

Dr. Hoff says the super majority of conservative Justices could also decide that student loan forgiveness should not go forward, but should be resolved in lower courts. Or, Dr. Hoff predicts the SCOTUS could rule that loan repayment should start back up. The question of whether the SCOTUS will act on this case comes as over 40 million students owe a total of $1.6 trillion to the government.

In Opposition

The hotly debated topic is complex. Dr. Hoff says opponents of student loan forgiveness worry about the power of the President, and how much money the debt relief will cost.

“I think the most important [argument] deals with the rationale in the first place; whether you can base such a widespread action, affecting so many people, on an executive order based on a national emergency [COVID-19] that opponents say doesn’t exist, or doesn’t exist anymore,” said Dr. Hoff. “I’ve seen various estimates. One, by the Congressional Budget Office, one by the General Accounting Office, one by the Committee for Responsible Federal Budget. But, my estimate is that, the fact that we’re not getting the interest from those loan repayments, is costing us about $100 billion a year.”

With those estimates, Dr. Hoff says by August 2023, the United States could lose up to $350 billion in lost interest since the student loan payments were first frozen in 2020. “That’s a significant amount. Essentially, it cancels out what the Biden Administration bragged about, that we would save as a result of the Inflation Reduction Act,” said Dr. Hoff.

In Support

However, supporters point out that with the Biden Administration’s Inflation Reduction Act, that money will be made up for. “Supporters are saying they’re already worried about a recession, and the fact that we have so many folks that still need to repay their student loans might put us into a significant decline, and continue into a real recession going forward,” said Dr. Hoff.

Dr. Hoff says supporters also point to the ongoing confusion about the status of student loan payment forgiveness.

“Supporters are saying those people who got approved for forgiveness might just not pay things back if this results in having to pay it back, because they think they’re out of the woods, as a result of the approval that’s been given by the Education Department,” said Dr. Hoff. “Whether you applied and didn’t get the word back, or applied and already got approved, you should definitely stay on top of this to see what eventually happens.”

The SCOTUS has not yet publicly commented on whether it will take up the case.

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