Washington — The Supreme Court will hear a second challenge to President Biden’s student loan forgiveness program, he said Monday, in a dispute brought by two borrowers with outstanding student loans due in late February or early March.
Legal battle emanating from Texas over Biden’s plan to provide up to $20,000 in student-loan relief to millions of borrowersBrought by a group of six Republican-led states, the Supreme Court will decide next year on both.
In announcing its decision to hear the Texas case, the Supreme Court said the parties would argue two questions: whether debt collectors Myra Brown and Alexander Taylor have legal standing to challenge the legality of the relief plan, and whether the plan is “statutoryly authorized” and was adopted in a procedurally proper manner.”
In both legal tussles before the Supreme Court, lower courts blocked implementation of the nationwide student loan forgiveness program, prompting the Justice Department to file emergency requests with the high court to reinstate the plan. But the relief program remains on hold pending oral arguments in the two cases. The president last month extended his moratorium on federal student loan payments until June 30, giving the high court time to consider the disputes.
mr bidenIn August he announced plans to cancel up to $10,000 in federal student loans for Americans earning less than $125,000 a year, and an additional $10,000 for Pell Grant recipients, which are awarded to students with the greatest financial need. According to the Department of Education, more than 26 million people have already applied for pardons, and 16 million applications have been approved.
The White House estimated that up to 43 million borrowers would be provided relief under the administration’s plan, of which about 20 million would have their outstanding debt canceled entirely.
Following the announcement of the loan forgiveness plan, the Departments of Justice and Education issued memos detailing the legal authority for student loan cancellation, relying on the HEROES Act, a 2003 law enacted after the September 11, 2001 terrorist attacks. The law, the Biden administration argued in the memo, vested Education Secretary Miguel Cardona with the authority to provide relief to federal student loan recipients during national emergencies such as the COVID-19 pandemic.
But the student loan forgiveness program was quickly challenged in federal courts, including by two Texas borrowers, Brown and Taylor. Brown is not eligible for relief under Mr. Biden’s plan because his loans are with commercial entities, while Taylor is eligible for $10,000 in loan forgiveness.
Both alleged in their lawsuit against the Department of Education and Cardona that they improperly publicized the plan without creating a notice-and-comment rule that gave them an opportunity to comment on the program.
a federal district court in Texas, ruling the plan is illegal and prohibits the Department of Education from canceling any loans. The Justice Department appealed, but the US Court of Appeals for the Fifth Circuit denied its request to stay the lower court’s order while legal proceedings were ongoing.
Solicitor General Elizabeth Prologer this month asked the Supreme Court to reinstate the student loan forgiveness program or, if the court was unwilling to grant relief, to hear the case with the GOP states’ challenge.
“The harm to the government and the public from vacating the Secretary’s action is significant,” Prologer told the court. “The HEROES Act reflects Congress’s decision that the Secretary must be able to act quickly and effectively to provide relief to student-loan borrowers affected by national emergencies. Here, the Secretary sought to protect vulnerable borrowers from delinquency and default.” (and thus wage garnishment, credit-report damage, and forfeiture of federal benefits).
The injunction issued by the district court, she said, “frustrates the government’s ability to respond to the damaging economic consequences of a devastating pandemic with policies that are essential” and leaves borrowers “in a precarious limbo.”
Like the lawsuit filed by the pair of Texas borrowers, a coalition of six states challenging the Biden administration’s plan argued that the Biden administration overstepped its authority with its plan to forgive student loan debt. The states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — also said the program would harm revenue earned by servicing federal student loans.
A federal district court in Missouri dismissed the lawsuit for lack of legal standing, but the US Court of Appeals for the 8th CircuitTo block implementation of the plan, prohibiting the Department of Education from discharging any student loan debt under the program.
Prologger asked the Supreme Court in November for the 8th Circuit to lift the injunction or agree to rehear the case. It agreed to do so at the beginning of the month.