Supreme Court Weighs Billions in Biden Student Loan Plan

WASHINGTON, DC — The Supreme Court is launching a biased legal battle over President Joe Biden’s plan to cancel or cut student loans owned by millions of Americans.

On Tuesday, the Supreme Court, with its conservative majority of 6 to 3, is hearing arguments on two objections to the plan, which has so far been blocked by Republican-appointed judges in lower courts.

The debate is scheduled to last two hours, but is likely to last much longer. The public can listen on the court’s website.

According to the Biden administration, 26 million people have applied and 16 million people have received approval to write off federal student loans of up to $20,000. The cost of the program is estimated at $400 billion over 30 years.

“I’m sure there is a legitimate reason to go ahead with this plan,” Biden said Monday at a Black History Month event.

The president, who once questioned his rights to broad student debt write-offs, first announced the program in August. Legal problems soon followed.

Republican-led states and congressional lawmakers, as well as conservative legitimate interests, oppose the plan as a clear violation of Biden’s executive power. Democratic-led states and liberal interest groups are backing the Democratic Party administration, urging the court to allow the plan to go into effect.

Without it, defaults on loans will rise sharply when the pause in loan payments ends no later than this summer, according to the administration. Payments were stopped in 2020 due to the coronavirus pandemic.

The administration says the 2003 law, commonly known as the Heroes Act, allows the secretary of education to cancel or change the terms of federal student loans due to the national emergency. The law was primarily intended to ensure that military personnel did not suffer financially while they served in the wars in Afghanistan and Iraq.

Nebraska and the other states that filed the lawsuit say the plan is not necessary to keep the default rate at about the same level as before the pandemic. The states say the 20 million borrowers whose loans are completely canceled will receive a “windfall” that will make them better than they were before the pandemic.

Dozens of borrowers came from all over the country to camp outside the courthouse on a damp Monday night in hopes of getting a place to argue. Among them was Cignetta Hill, who said the Biden plan would erase all but about $500 of the $20,000 or so she has in student loans.

“I was 18 when I went to college. I didn’t know it would be such a big burden. No student should have to deal with this. No one should have to deal with this,” said Hill, 22, who plans to study law after she graduates from the University of Wisconsin-Milwaukee in May.

Biden’s plan may be met with cold reception in the courtroom. The court’s conservatives were skeptical of Biden’s other pandemic-related initiatives, including vaccination demands and the suspension of evictions. They were announced mainly as public health measures to slow the spread of COVID-19.

The write-off plan, by contrast, aims to counter the economic fallout from the pandemic.

The national emergency is expected to end on May 11, but the administration says the economic fallout will linger despite historically low unemployment and other signs of economic strength.

In addition to the debate about the power to forgive student debt, the court will also be looking into whether the states and the two people whose challenge is also before the judges have the legal right or capacity to sue.

The parties generally must show that they will suffer financial damage and benefit from a judgment in their favor. A federal judge initially found that the states would not be harmed and dismissed their claim before an appeals panel said the case could be heard.

Of the two people who have sued in Texas, one has student loans that are commercially owned, and the other is eligible for $10,000 debt relief, not the $20,000 maximum. They get nothing if they win the case.

A decision is expected by the end of June.

Associated Press contributors Jessica Gresko and Colleen Binkley contributed to this report.