US Supreme Court to decide fate of Biden student loan forgiveness

[June 30, 2023]  By John Kruzel

WASHINGTON (Reuters) - The U.S Supreme Court on Friday was set to rule on the legality of President Joe Biden's plan to cancel $430 billion in student loan debt - a move intended to benefit up to 43 million Americans and fulfill a campaign promise.

The conservative justices during arguments in the case in February signaled skepticism over the plan as they mulled legal challenges pursued by six conservative-leaning states - Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina - and two individual borrowers.

The dispute, one of two major rulings the justices are expected to issue on the final day of decisions for their term that began in October, has high stakes for 26 million U.S. borrowers who applied for relief after Biden announced the plan in August 2022 until last November, when lower courts blocked the plan.

Biden's plan fulfilled his 2020 campaign promise to cancel a portion of $1.6 trillion in federal student loan debt but was criticized by Republicans who called it an overreach of his authority and an unfair benefit to college-educated borrowers while other borrowers received no such relief. Biden is seeking re-election next year.

Under the plan, the U.S. government would forgive up to $10,000 in federal student debt for Americans making under $125,000 who obtained loans to pay for college and other post-secondary education and $20,000 for recipients of Pell grants to students from lower-income families.

During February arguments in the case, Biden's administration said the plan was authorized under a 2003 federal law called the Higher Education Relief Opportunities for Students Act, or HEROES Act, which empowers the U.S. education secretary to "waive or modify" student financial assistance during war or national emergencies."

U.S. President Joe Biden delivers remarks about the student loan forgiveness program from an auditorium on the White House campus in Washington, U.S., October 17, 2022. REUTERS/Leah Millis/

Both Biden, a Democrat, and his Republican predecessor Donald Trump relied upon the HEROES Act beginning in 2020 to repeatedly pause student loan payments and halt interest from accruing to alleviate financial strain on student loan borrowers during the COVID-19 pandemic.

During the arguments, a Justice Department lawyer portrayed the debt relief as a benefits program rather than an assertion of regulatory power not authorized by Congress.

In response to the legal challenge brought by the states, a federal judge in Missouri in October 2022 ruled that they lacked the legal standing to sue. On appeal, the St. Louis-based 8th U.S. Circuit Court of Appeals found that at least one of the states, Missouri, had proper standing.

In the case brought by individual borrowers named Myra Brown and Alexander Taylor, a federal judge in Texas ruled in November 2022 that the plan exceeded the Biden administration's authority - a ruling that the New Orleans-based 5th U.S. Circuit Court of Appeals declined to put on hold pending appeal.

Some 53% of Americans said they support Biden's debt relief, with 45% opposed, according to a Reuters/Ipsos poll from March, with respondents dividing sharply along partisan lines with Democrats broadly supportive and Republicans generally opposed.

(Reporting by John Kruzel; Editing by Will Dunham)

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