On February 28, Tuesday, the honorable Supreme Court will be hearing oral arguments in two cases related to the student loan forgiveness program initiated by the Biden administration.
The cases that are scheduled for the hearing have put a block on the student loan forgiveness program of the Biden administration, which would cancel up to $20,000 of federally held student loan debt per borrower.
Statistics reveal that there were almost 40 million people who were eligible for the forgiveness program and the outcome of the hearing is said to affect the finances of the 26 million applicants who applied for the forgiveness before the program was suspended in November.
The ruling of the case is expected to come over the summer and the student loan payments are expected to resume after two the ruling.
If the outcome of the case is not in favor of the policies of the Biden government, people who have any pending payments are expected to adjust their monthly budget so that they can accommodate all their needs while taking care of their payments, which they have not paid for almost three years.
The Two Supreme Court Cases
The Supreme Court on Tuesday will be considering two cases that have led to the blocking of the student loan forgiveness program initiated by the Biden government.
Right after the announcement about the program, the conservatives raised their concerns and opposition against the program.
They filed a number of lawsuits with the aim to stop the program. While most of the lawsuits filed by them were dismissed easily, two of the cases were successful in meeting their aim.
These two cases prompted the judges to put a block on the forgiveness program. While they started out in lower courts, the case has finally reached the Supreme Court through different appeals.
The first among the two cases is the lawsuit where the state of Nebraska along with five other states sued the Biden administration in federal court. The case aimed to put an end to the forgiveness program and so far, the plaintiffs were successful in their view.
Even though the case was dismissed in the federal court, the states appealed. After the case was appealed, a higher court ordered the temporary blocking of the program. Eventually, the states appealed the Biden vs. Nebraska case to the Supreme Court.
The second case that the Supreme Court will hold the hearing for is from two college graduate students. The names of the students are Myra Brown and Alexander Taylor. A conservative activist group also backs the students.
The students sued the Department of Education regarding choosing the people eligible for the forgiveness program. The case argues that the ways in which people were deemed eligible for the program were unfair and that they broke the law.
During the time when the case was presented in a federal court, a judge sided with the argument of the students, and the case was appealed, making its way to the honorable Supreme Court.
As for the court to rule on the merit of the case, the plaintiffs must be able to prove that they had been harmed by the defendant breaking the law. When it comes to the first case between Bidden’s lawyers against the States, the states must prove that they had been harmed by the forgiveness policy in order for a favorable ruling for them.
Among the five states that are appearing against the program includes the state of Missouri. The state argues that the forgiveness program affects the Higher Education Loan Authority of the State of Missouri (MOHELA), which is a state agency.
The student loan servicer is said to be affected as the program considerably reduces the loan servicing fees that the agency collects.
Another argument put forward by the states is the effect of the program on the income tax collected by them.
As millions of loans are to be forgiven before the year 2025, the people who receive the forgiveness will be free of their duty to pay taxes for the amount that they have been forgiven, which is a provision of the American Rescue Plan pandemic relief.
The effect of the forgiveness plan on the income tax will also be considered by the Supreme Court.
In the second case, the students say that they have been harem by the program due to the lack of a public comment period when it was established.
The student loan by Brown is not eligible for forgiveness because the student loans are opened to commercial lenders rather than government agencies.
As for Taylor, he did not attend college on a Pell grant, which makes him ineligible for the full forgiveness of $20,000.
The Counter Argument
The lawyers representing the Biden administration are also ready to take on the arguments raised by the two cases. The lawyers are striking on their point that the states or the students have standing and even if they do, the program did not break by law.
As for the argument put forward by the states, Biden’s lawyers argue that MOHELA is a separate legal entity from the state and of the agency that wanted to appeal; against the program, they could have done it on their behalf but did not choose to.
The lawyers also point to the statement given by MOHELA’s leaders which said that the decision to sue was not from the agency.
As for the argument against the students, the lawyers state that if they win, it will be of no use to anyone. If they succeed in putting an end to the forgiveness program, that won’t be of any help to anyone and will also leave one of the students, Taylor, in a much worse condition than now.
The Heroes Act Of 2003
The case regarding student loan forgiveness completely revolves around the Heroes Act of 2003. The act which was passed by congress originally in 2003 was made permanent later in 2007. The act was aimed at helping military servicemen with education loans.
The act also grants broad powers to the Secretary of Education in case of national emergencies.
There is a provision in the act that suggests or grants the Secretary the power to modify any regularity provision regarding student loan programs to ensure that the borrowers are not placed in a difficult position financially because of a national emergency.
While the Biden administration lays its argument on the act, the national emergency from a pandemic, which was first declared by former president Donald Trump in 2020 will expire in May.