The Supreme Court on Thursday denied an emergency appeal to immediately revive President Biden’s student loan forgiveness plan, but agreed to issue a ruling early next year on its legality.
The justices left in place an appeals court ruling that halted the programme.
The decision is a temporary setback for the administration but not a defeat for its plan to forego student loans of up to $20,000 to as many as 20 million borrowers.
Anticipating such a move by the court, the administration last week extended its moratorium on borrowers to resume paying monthly installments, at least until June 30 of next year. By then, the Supreme Court will likely have issued a ruling.
But Biden and his attorneys face an uphill battle against a conservative court that questions government agencies’ claim to sweeping power that Congress has not clearly agreed to.
At issue is whether the COVID-19 pandemic and the national emergency declared by then-President Trump in March 2020 authorizes the Department of Education to bypass its moratorium and forfeit some or all student loans held by those earning less than $125,000. year or up to $250,000 per couple.
Last year, conservatives in court rejected Biden’s use of the pandemic to expand his regulatory powers.
The justices, in a 6-3 decision, ended a nationwide voluntary moratorium on evictions, and said the belief that Congress gave such power to the Centers for Disease Control and Prevention “strains credulity.”
They also rescinded a Labor Department rule that would have required large employers to enforce a vaccine mandate for their employees.
The administration’s student loan forgiveness plan is based on the Student Higher Education Relief Opportunities Act of 2003, or HEROES Act, which Congress adopted without debate shortly after the Iraq War began.
It said the Secretary of Education may “waive or modify” the Student Assistance Program “if necessary in connection with a war or other military operation or national emergency”.
The goal was to ensure that “affected individuals” such as soldiers and National Guard troops were not placed “in a worse financial position” than being called up for service. Their loans have not been cancelled.
The law also said that an “affected individual” includes anyone who “resides or works in an area that has been declared a disaster area by any federal, state, or local official in connection with a national emergency.”
Biden’s lawyers have argued that those who live in the United States or abroad qualify as an “affected individual” under the law because the COVID-19 pandemic is global in scope.
Six Republican lawyers have sued and argued that Congress never authorized the government to waive student loans at a cost of more than $400 billion, according to the Congressional Budget Office.
They cited House Speaker Nancy Pelosi, who said last year “It would take congressional action, not an executive order, to cancel student loan debt. People think the president of the United States has the power to forgive debt. He hasn’t. He can delay. He can delay, but not He has this power.”
Bills have been introduced in Congress to allow for forgiveness of the loan, but they have not been acted upon.
The question facing those trying to block Biden in court is whether they have legal status. It was not certain that any person or country could claim to have the power to sue because they would be harmed by the president’s plan to forego some of the loans. Taxpayers who object to a spending program have no standing, and several lawsuits have been dismissed for this reason.
Attorneys for Republican-led states have argued that state agencies that handle student loans will reduce revenue if large numbers of loans are written off, which in turn will reduce state revenue.
A federal judge in St. Louis dismissed the states’ claims on the grounds of lack of standing, but the Eighth Circuit Court opposed and issued a nationwide injunction that stopped Biden’s plan.
In a 3-0 decision on November 14, the justices cited the Missouri Higher Education Loan Authority, which is facing an “unexpected financial downturn” and “presents a financial risk to the state.”
Four days later, Biden’s general attorney, Elizabeth Prilogar, filed an emergency appeal asking the Supreme Court to overturn the injunction and allow the Department of Education to begin forgiving student loans. It said the states had no standing to sue because their claims were based on “sheer speculation” about future revenue.
She argued in Biden v. Nebraska that “the president’s plan falls perfectly within the plain letter” of the law. In fact, the whole purpose of the HEROES Act is to authorize [Education] The Secretary to grant student loan relief to borrowers at risk due to a national emergency — exactly what the Secretary has done here.”
Instead of just deciding whether to allow the forgiveness plan to proceed while lower courts hear the dispute, the Supreme Court will now hear the case directly, with arguments set for February.