Supreme Court to rule on Biden’s student loan cancellation plan

WASHINGTON (AP) — The Supreme Court The Biden administration agreed Thursday to decide whether to broadly cancel student loans, putting the plan on hold for now but signaling a final answer by early summer.

That is two months before the expiry of the newly extended moratorium on loan repayments.

The administration wanted a court order allowing the project to go ahead, pending court challenges. The justices didn’t do that, but agreed to the administration’s pushback, setting arguments on whether the plan is legal for late February or early March.

President Joe Biden’s plan promises $10,000 in federal student loan forgiveness for people with incomes below $125,000 or families with incomes below $250,000. Pell Grant recipients are generally eligible for an additional $10,000 in relief if they demonstrate greater financial need.

The Congressional Budget Office said the program would cost about $400 billion over the next three decades.

More than 26 million people have already applied for relief, and 16 million have been approved, but the Department of Education stopped processing applications last month after a federal judge in Texas struck down the program.

The administration said it was pleased the nation’s highest court had intervened, and Biden said on Twitter that the White House would continue to fight for the loan plan.

“Republican officials are throwing up roadblocks to prevent middle-class families from getting the student loan relief they need,” he said in a tweet.

The Texas case is one of two in which federal judges have barred the administration from implementing debt cancellations.

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In a separate lawsuit filed by six states, a three-judge panel of the 8th US Circuit Court of Appeals in St. Louis halted the program, and that case is before the Supreme Court.

The moratorium was set to expire on January 1, when Biden stalled his debt cancellation plan in the face of legal challenges from conservative opponents.

The new expiration date is 60 days after the legal issue is resolved, but not the end of August.

Conservative lawyers, Republican lawmakers and pro-business groups have insisted that Biden overstepped his authority in taking such sweeping measures without congressional approval. They called it an unfair government handout to relatively affluent people at the expense of taxpayers who didn’t pursue higher education.

Missouri Attorney General Eric Schmidt, a Republican, said in a statement following the high court’s order that the Biden plan “will expose Americans who have defaulted or already paid off their loans to even more economic hardship.” Missouri is one of six states to sue to block the plan, along with Arkansas, Iowa, Kansas, Nebraska and South Carolina.

The administration argued that the loan waiver was legal under a 2003 law aimed at providing assistance to members of the military. The program is “a response to the devastating epidemic of student loan relief designed to protect vulnerable borrowers from delinquency and default,” the Justice Department said in court documents.

The law, the HEROES Act, allows the Secretary of Education to “waive or modify any statutory or regulatory provisions applicable to student financial aid programs … that the Secretary deems necessary in connection with a war or other military operation or national emergency.”

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In suspending the plan, the 8th Circuit panel said there was little harm to the borrowers because repayment had stopped. The Court of Appeal said that allowing the annulment to proceed before a definitive court ruling would have had “irreversible impact”.

U.S. District Judge Mark Pittman, an appointee of former President Donald Trump, issued the most detailed ruling in the Texas case, finding that such an expensive program requires clear congressional authorization.

Judges will face an important practical question, whether anyone suing faces any legal or financial harm.

The 8th Circuit judges, two Trump appointees and former President George W. A Bush-appointed judge ruled that the Missouri Higher Education Loan Commission may have financial costs and said that was enough.

In the Texas case, plaintiffs Myra Brown and Alexander Taylor may file their lawsuit, Pittman wrote. Brown was ineligible for debt relief because her loans were business-derived, and Taylor was only eligible for $10,000, not the full $20,000 because she didn’t receive a Pell grant.

But Pittman said it’s enough that the government doesn’t take public comments on the plan, meaning no individual has an opportunity to provide input on a plan.

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