January 27, 2023

FILE – President Joe Biden answers questions with Education Secretary Miguel Cardona as they exit an event on the beta test of the student debt relief portal in the South Court Auditorium in the White House complex in Washington, Oct. 17, 2022. The Biden administration is no longer accepting applications for student loan forgiveness after a second federal court shut down the program. (AP Photo/Susan Walsh, file)

WASHINGTON (AP) — The Supreme Court on Thursday agreed to rule on whether the Biden administration can largely call off student loans, blocking the program for now but signaling a final response by early summer.

That’s about two months before the newly extended loan repayment pause expires.

The administration had desired a court order that would have allowed the program to operate even during the court challenge. The judges did not, but agreed with the government’s fallback and presented arguments for late February or early March on whether the program is legal.

President Joe Biden’s plan promises $10,000 in debt relief for students earning less than $125,000 or households earning less than $250,000. Pell Grant recipients, who typically demonstrate greater financial need, are eligible for an additional $10,000 relief.

The Congressional Budget Office has announced that the program will cost about $400 billion over the next three decades.

More than 26 million people have already applied for the relief, and 16 million have been approved, but the Department of Education stopped processing applications last month after a federal judge in Texas struck down the plan.

The administration said it was pleased the nation’s highest court had intervened, and Biden said on Twitter that the White House would continue to fight for the loan plan.

“Republican officials are setting up roadblocks to prevent middle-class families from getting the student debt relief they need.” he said in a tweet.

The Texas case is one of two cases where federal judges have barred the administration from doing the loan cancellations.

In a separate lawsuit filed by six states, a three-judge panel of the 8th US Circuit Court of Appeals in St. Louis also shelved the plan, and that case is before the Supreme Court.

The moratorium was scheduled to expire on Jan. 1, a date Biden set before his debt relief plan stalled amid legal challenges from conservative opponents.

The new expiry date is 60 days after the settlement of the legal dispute, but no later than the end of August.

Conservative attorneys, Republican lawmakers and pro-business groups have claimed Biden exceeded his powers by taking sweeping measures without congressional approval. They called it an unfair government giveaway to relatively wealthy people at the expense of taxpayers not pursuing higher education.

Missouri Attorney General Eric Schmitt, a Republican, said in a statement following the Supreme Court order that the Biden plan “Americans who haven’t taken out loans or who have already paid off their loans would be saddled with even more economic problems.” Missouri is one of six states that have filed a lawsuit against the plan, along with Arkansas, Iowa, Kansas, Nebraska and South Carolina.

The government has argued that the loan cancellations are legal under a 2003 law aimed at helping members of the military. The program is an answer to “a devastating pandemic with student loan easing designed to protect vulnerable borrowers from delinquency and default,” The Justice Department said in court filings.

The law, the HEROES Act, allows the Secretary of Education to do it “waive or modify any statute or regulatory requirement applicable to student financial assistance programs … if the Secretary deems it necessary in connection with a war or other military operation or national emergency.”

In suspending the program, the 8th Circuit Panel said little harm was done to borrowers as repayments were suspended. Allowing cancellations before a final court judgment would have changed “irreversible effects”, said the appeals court.

US District Judge Mark Pittman, an appointee to former President Donald Trump, issued a more sweeping ruling in the Texas case, noting that such a costly program required clear congressional approval.

The judges will also address an important procedural question of whether there is a risk of legal or financial harm to anyone who has sued.

The 8th Circuit Justices, two Trump-appointed and one chosen by former President George W. Bush, determined that the Missouri Higher Education Loan Authority could incur financial costs and said that was enough.

In the Texas case, Pittman wrote that plaintiffs Myra Brown and Alexander Taylor could file their suit, although neither faces financial harm. Brown is not eligible for debt relief because her loans are held commercially, and Taylor is eligible for only $10,000 rather than the full $20,000 because he did not receive a Pell Scholarship.

But Pittman said it was enough that the government was not taking public comments about the program, meaning no person had the opportunity to make contributions to a program from which they would be at least partially excluded.

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