On Friday, the U.S. Supreme Court was expected to make a ruling regarding the legality of President Joe Biden’s proposal to cancel $430 billion in student loan debt. This initiative aimed to benefit around 43 million Americans and fulfill one of Biden’s campaign promises.
During the February arguments of the case, the conservative justices displayed skepticism towards the plan as they considered legal challenges brought forth by six conservative-leaning states (Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina) and two individual borrowers.
This dispute, one of two significant rulings expected on the final day of the term that started in October, carries high stakes for the 26 million U.S. borrowers who sought relief after Biden announced the plan in August 2022.
However, lower courts halted the implementation of the plan in November.
Biden’s proposal fulfilled his promise from the 2020 campaign to cancel a portion of the $1.6 trillion federal student loan debt.
Nonetheless, Republicans criticized it, deeming it an overreach of his authority and an unfair advantage for college-educated borrowers compared to others who did not receive such relief.
Biden, who is running for re-election next year, introduced a plan where the U.S. government would forgive up to $10,000 in federal student debt for individuals earning less than $125,000 and who took out loans to finance their college or post-secondary education.
Additionally, recipients of Pell grants from lower-income families would be eligible for up to $20,000 in debt forgiveness.
During February arguments in the case, Biden’s administration said the plan was authorized under a 2003 federal law called the Higher Education Relief Opportunities for Students Act, or HEROES Act, which empowers the U.S. education secretary to “waive or modify” student financial assistance during war or national emergencies.”
Both Biden, a Democrat, and his Republican predecessor Donald Trump relied upon the HEROES Act beginning in 2020 to repeatedly pause student loan payments and halt interest from accruing to alleviate financial strain on student loan borrowers during the COVID-19 pandemic.
During the arguments, a Justice Department lawyer portrayed the debt relief as a benefits program rather than an assertion of regulatory power not authorized by Congress.
In response to the legal challenge brought by the states, a federal judge in Missouri in October 2022 ruled that they lacked the legal standing to sue. On appeal, the St. Louis-based 8th U.S. Circuit Court of Appeals found that at least one of the states, Missouri, had proper standing.
In the case brought by individual borrowers named Myra Brown and Alexander Taylor, a federal judge in Texas ruled in November 2022 that the plan exceeded the Biden administration’s authority – a ruling that the New Orleans-based 5th U.S. Circuit Court of Appeals declined to put on hold pending appeal.
Some 53% of Americans said they support Biden’s debt relief, with 45% opposed, according to a Reuters/Ipsos poll from March, with respondents dividing sharply along partisan lines with Democrats broadly supportive and Republicans generally opposed.