After being blocked by two different federal district courts, President Joe Biden’s plan to highest court announced Thursday that it would hear arguments in the case of Nebraska v. Biden in February, 2023.for eligible borrowers is now going to the Supreme Court. The country’s
The Supreme Court did not rule on the White House’s motion to vacate a temporary injunction on the program, saying it would be “deferred pending oral arguments.” A decision on the case is not expected until late spring or early summer 2023.
On Nov. 10, federal appeals court decision in the Nebraska v. Biden case blocked the debt cancellation program with a temporary injunction., claiming it was unconstitutional. Four days later, a
The message: “Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications.” So far, 26 million Americans have applied for debt cancellation, and 16 million have been approved.has stopped accepting submissions. Instead, it displays a
Learn more about all the legal challenges to the onetime student loan debt relief plan and how they could impact forgiveness for eligible borrowers. For more about student loan debt relief, learnand .
What are the legal arguments against Biden’s student loan debt relief plan?
The legal arguments against student debt loan forgiveness have so far fallen into five main buckets: claims of harm to borrowers; claims of harm to states and state agencies; claims of harm due to the devaluation of Administrative Procedure Act; and claims that the program is unconstitutional. Many of the lawsuits include multiple claims of damage.; claims that the program violates the
One of the biggest challenges for those opposing student loan debt relief in court has been finding plaintiffs with legal standing who would suffer direct harm from the student loan forgiveness program. That was first demonstrated by the case of Garrison v. US Department of Education: Borrower Frank Garrison claimed he was harmed because his would result in a state tax burden in Indiana. Garrison’s legal standing was seriously damaged when the Department of Education announced that borrowers could opt out of debt forgiveness.
The Nov. 10 decision in Brown vs. US Department of Education to rule the student loan debt relief program unlawful was the first court order to directly address the merits of arguments against the plan. In his 26-page opinion, Judge Mark Pittman wrote that the executive branch had unconstitutionally used Congressional powers: “The HEROES Act — a law to provide loan assistance to military personnel defending our nation — does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program. The Program is thus an unconstitutional exercise of Congress’s legislative power and must be vacated.”
What are all the court challenges to the student loan debt relief plan?
The two currently most significant lawsuits against the onetime student loan debt relief program have come from states and from two different student loan borrowers claiming harm.
In the first case, Nebraska v. Biden, six Republican-led states (Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina) claim that the White House plan will hurt their state tax revenues and state-based loan agencies. The states lost their motion for an injunction in lower courts and appealed to the Court of Appeals for the Eighth Circuit, which ruled in favor of a temporary injunction. The Biden administration appealed that injunction to the Supreme Court, leading to its ruling today.
In the second case, Brown v. US Department of Education, two Texas borrowers — a plaintiff with nonfederally held FFEL loans and a plaintiff who didn’t receive a Pell Grant — claim that the debt relief plan should be struck down because it didn’t hold a “notice-and-comment period” as required by the Administrative Procedure Act. The Nov. 10 decision to block the program still applies nationwide.
Four other lawsuits challenging student loan debt relief have had less success so far.
As mentioned above, Garrison v. US Department of Education — which claimed the plaintiff would be injured by state taxes on automatic debt relief — was dismissed by the District Court for the Southern District of Indiana. The decision has been appealed to the Court of Appeals for the Seventh Circuit, but the case seems to have little chance of succeeding. The libertarian law firm Pacific Legal Foundation filed an emergency motion with the Supreme Court for the case, but it was rejected on Nov. 4.
Similarly, in Brown County Taxpayers Association v. Biden, a Wisconsin court dismissed a lawsuit from taxpayers who claimed they would have to pay more taxes because of the student loan debt relief plan. The court ruled that there is no such thing as “taxpayer standing.”
The taxpayers group also claims the debt forgiveness plan is unconstitutional. It filed emergency motions with both the Seventh Circuit Court of Appeals and the US Supreme Court to stop the plan, but both motions were denied without explanation.
Another case brought by a state, Arizona v. Biden, takes a slightly different tack than the Nebraska lawsuit. Led by Arizona Attorney General Mark Brnovich, the lawsuit makes three claims of injury. It says the state will lose tax revenue because student loan debt forgiveness can’t be taxed until 2025; the program will increase inflation, which hurts the state’s economy; and recruiting for government jobs will be hurt by the devaluation of the Public Service Loan Forgiveness program. Arizona has not filed for a temporary injunction, and court hearings on the case have not yet begun.
In the final lawsuit — Cato Institute v. US Department of Education — a libertarian think tank is claiming that it will be injured by one-time student loan debt relief’s weakening of the Public Service Loan Forgiveness program, making it harder for it to recruit employees who would qualify. However, the recent decision by the Texas court might preclude this case. Principals are meeting Nov. 15 to discuss a possible administrative stay.
How does the White House defend its student loan debt relief program?
The Department of Education contends that its one-time student loan debt relief plan is protected by the Higher Education Relief Opportunities for Students Act of 2003, also known as the HEROES Act. That law authorizes the Secretary of Education to change any regulations related to any student financial assistance programs for Americans who “suffered direct economic hardship as a direct result of a war or other military operation or national emergency.”
The White House says that the COVID-19 public health emergency gives the Department of Education the legal basis to cancel student loan debt under the HEROES Act.
The US has been in a public health emergency ever since the Secretary of Health and Human Services declared one because of COVID-19 on Jan. 31, 2020. That emergency declaration has been extended many times since, most recently on Oct. 13, 2022.
In a statement after the Supreme Court’s decision to hear the case, White House Press Secretary Karine Jean-Pierre said that one-time student loan debt relief is “legal, supported by careful analysis from administration lawyers.”
When will the Supreme Court rule on student loan debt forgiveness?
The Feb. 2023 scheduled hearing for Nebraska v. Biden is considered an “unusually fast track” for a Supreme Court case, according to a New York Times report.
The Supreme Court’s term begins on the first Monday in October and runs for the whole year, though the court generally recesses from late June or early July through October. The court mostly splits the months of October through April between hearing arguments from lawyers and holding conferences where the justices discuss the cases.
It uses the May and June months to continue deliberations and issue most of its opinions. During the Supreme Court’s 2021-2022 term, the court issued more than half of its opinions in June 2022. The court is only required to issue a ruling by the end of its term, so there’s no definite answer as to when the decision on one-time student loan debt relief will be made. Most experts are predicting that the ruling will come in either May or June of 2023.
Because of the court deferred making a decision on the petition to vacate the temporary injunction on the program, student loan debt relief will be blocked until the case is finally decided. In response to the legal stoppage, the Department of Education once againthat has been in effect since March 2020. Payment will now resume on either June 30, 2023, or 60 days after a final legal decision on the program. If there is no decision by June 30, payments will start up again 60 days after that, on Aug. 29, 2023.