Biden To Supreme Court: My Student Loan Forgiveness Plan Is Legal

The Biden administration has filed a formal legal brief with the Supreme Court, defending the President’s signature one-time student loan forgiveness plan in advance of oral arguments set for next month.

Here’s the latest.

Supreme Court to Decide Fate of Biden’s One-Time Student Loan Forgiveness Plan

Biden’s student loan cancellation program would have allowed millions of borrowers to receive up to $20,000 in federal student loan forgiveness. The Education Department had estimated that up to 40 million borrowers could qualify for relief, with close to half getting their federal student loan balances completely wiped out.

But federal courts, in response to multiple legal challenges, have blocked the program. The Biden administration has appealed two of these cases to the U.S. Supreme Court:

• The 8th Circuit Court of Appeals implemented a nationwide injunction that stopped the program. The legal challenge was brought by a group of Republican-led states, which argued that Biden’s loan forgiveness plan deprives state-related agencies that administer the Family Federal Education Loan Program (FFELP) of revenue, which in turn causes financial harm to the states. The crux of the argument is that borrowers consolidating FFELP loans into Direct loans to qualify for student loan forgiveness will shrink the loan portfolios of FFELP agencies and, thus, reduce the associated payments they would receive from borrowers.
• Separately, the 5th Circuit Court of Appeals declined to overrule a trial court decision that struck down Biden’s loan forgiveness program as unconstitutional. In that legal challenge, a conservative-leaning organization argued that two borrowers were improperly denied the right to submit public comments before the program’s implementation, in violation of federal law.

Biden Administration Tells Supreme Court That Student Loan Forgiveness Plan is Legal

In a legal brief submitted this week, the Biden administration strongly defended the student loan forgiveness program, arguing that the HEROES Act of 2003 — a federal statute that allows for modifications of federal student loan programs during national emergencies — authorizes the relief.

“Several provisions of the HEROES Act underscore Congress’s intent to authorize the Secretary to respond quickly and fully to national emergencies,” said Justice Department attorneys in the brief. “The lower courts’ orders have erroneously deprived the Secretary of his statutory authority to provide targeted student-loan debt relief to borrowers affected by national emergencies, leaving millions of economically vulnerable borrowers in limbo.”

A key legal issue in the two cases is standing — the concept that a party bringing a legal challenge must be able to show that they would suffer a concrete harm sufficiently connected to the challenged policy for a federal court to even reach the policy’s underlying legal merits. The Biden administration argues that the Plaintiffs in both cases do not have standing.

“To establish Article III standing, a plaintiff must show that she has suffered an injury in fact that is fairly traceable to the defendant’s challenged conduct and likely to be redressed by judicial relief,” noted the administration in the brief. “Neither the [Republican-led] States [in the 8th Circuit case] nor [the two borrowers in the 5th Circuit case] can satisfy those fundamental requirements.”

The administration argues that any financial link between Biden’s student loan forgiveness plan, FFELP agencies, and state treasuries is tenuous and speculative at best. And the brief notes that not only does the HEROES Act not require periods of public comment before the issuance of emergency regulations, but that the two borrowers claiming to be harmed would actually be worse off if they did not receive the student loan forgiveness they appear to be entitled to under the plan.

Next Steps in Student Loan Forgiveness Legal Battle

Next, the Plaintiffs who originally brought the legal challenges must file their own legal briefs by January 27. The Biden administration will then have the opportunity to reply to that brief; that reply is due by February 15. A formal hearing where attorneys for all sides will appear before the full Supreme Court is set for February 28.

“The Biden-Harris Administration remains committed to fighting to deliver essential student debt relief to tens of millions of Americans,” said Education Secretary Miguel Cardona in a statement on Friday. “We remain confident in our legal authority to adopt this program that will ensure the financial harms caused by the pandemic don’t drive borrowers into delinquency and default.”

Further Student Loan Forgiveness Reading

Big Student Loan Forgiveness Update As Education Department Clarifies Eligibility For One-Time Adjustment

Student Loan Forgiveness Could Be Big In 2023: Here’s What To Expect

The Student Loan Pause Is Actually Leading To Loan Forgiveness — Are Further Extensions Coming?

23,000 Student Loan Borrowers Will Get $19 Million To Resolve Debt Relief Fraud Claims