The U.S. Supreme Court has released a more detailed timeline on how it intends to handle two lawsuits challenging President Biden’s student loan forgiveness program.
Here’s where things stand.
Student Loan Forgiveness Legal Challenges
Biden’s one-time student loan cancellation program would have allowed 40 million borrowers to receive up to $20,000 in federal student loan forgiveness. But the program has been blocked — and no one has received any loan forgiveness — due to two legal challenges:
- A federal appeals court (the 8th Circuit) allowed a nationwide injunction to go into effect, which halts the program while the legal process continues. The underlying case involves a group of Republican-led states who are arguing that Biden’s initiative deprives state treasuries of revenue because state-affiliated agencies that administer the Family Federal Education Loan Program (FFELP), which have some financial ties with the states, would see their loan portfolios shrink as borrowers consolidate their student loans and obtain loan forgiveness.
- A second case out of the 5th Circuit Court of Appeals follows a lower court ruling that struck down the program. In that suit, a conservative-leaning group representing individual borrowers argued that the Biden administration improperly relied on emergency regulatory authority to enact the program, which unlawfully bypassed normal federal regulatory procedures and deprived borrowers of the opportunity to engage in public input.
The Biden administration has consistently maintained that the lawsuits are frivolous and that the student loan forgiveness program is legal, and appealed to the Supreme Court. Attorneys for the administration have argued that the administration properly relied on the HEROES Act of 2003, which grants the executive branch broad authority to modify federal student loan programs in response to national emergencies, like a pandemic. A key author of the statute filed an amicus brief with the Supreme Court, arguing that this type of debt cancellation program is exactly the kind of modifications that Congress intended when it enacted the legislation.
The Trump administration relied on the HEROES Act to initially pause federal student loan payments and interest in response to the pandemic in March 2020. And both the Trump and Biden administrations have relied on the statute to issue multiple extensions of the student loan pause beyond its original six-month period.
Supreme Court Sets Schedule for Student Loan Forgiveness Challenges
The Supreme Court has agreed to consider the Biden administration’s appeals in both cases. And this week, the Court set a schedule for next steps:
- The Biden administration must file legal briefs by January 4, 2023.
- The challengers in both cases must file their own legal briefs by January 27, 2023.
- The Biden administration must submit any reply to the challengers’ briefs by February 15.
The Court has not yet scheduled a specific date for oral arguments, but it is expected to be in late February or early March. While a ruling would not be instant, the hearing will provide critical clues regarding how the individual justices on the Supreme Court view the legal arguments from both sides.
The Court could issue a ruling anytime after the oral argument hearing. However, major Supreme Court decisions are typically released in June.
If the Court rules in favor of the administration, the Education Department can resume processing student loan forgiveness applications, and will be able to start providing relief to borrowers. If the Court rules against the administration, however, Biden officials will have to consider a number of imperfect alternative options.
Student Loan Pause Is Extended Pending Court Outcome
The Biden administration has extended the ongoing student loan pause in response to the Supreme Court litigation. The pause was originally supposed to end on December 31, but payments will now not resume until 60 days after a Supreme Court ruling or June 30, 2023, whichever occurs first. This means that borrowers covered by the payment pause may not have to resume payments on their student loans until August 2023.
As has been the case since March 2020, the months comprising the student loan payment pause count towards loan forgiveness periods for Income-Driven Repayment (IDR) plans and Public Service Loan Forgiveness (PSLF).