Over the past few weeks, you may have seen headlines swirling about President Joe Biden’s student debt forgiveness plan. One question might be on your mind: Is it still happening?
There are a number of factors still up in the air, the biggest of which is the Supreme Court’s looming decision on the plan. The bottom line: The president’s forgiveness plan is still on the table. If the plan is allowed to proceed, borrowers with federal student loans who received Pell Grants from the Department of Education will be eligible for up to $20,000 in debt cancellation; if you didn’t get a Pell Grant, you’ll be eligible for up to $10,000. The White House said more than 40 million borrowers are eligible for the program. If this plan doesn’t go through, Biden has a workaround that will allow him to approve widespread debt relief on a “case-by-case” basis, as Slate’s Mark Joseph Stern wrote last year.
Since the debt forgiveness plan was announced last year, and in less than four weeks of the application’s being live, the White House said 26 million people applied and more than 16 million were approved—but no debt has been forgiven yet. That’s because at least six lawsuits were filed against the president’s plan and an appeals court issued an injunction that’s preventing it from taking effect.
But that’s not all! These are three big factors currently in play around student debt forgiveness:
1. A SCOTUS Decision
Out of the many lawsuits filed, two have stuck. Shortly after the Biden administration released its student debt forgiveness plan last year, six Republican-led states—Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina—filed a lawsuit arguing that Biden is overstepping his presidential authority, since his plan bypasses authorization from Congress. The Biden administration argues it does have the power under the HEROES Act of 2003, which allows the secretary of education to make changes to the federal loan system during national emergencies—aka COVID-19.
There’s more: Two borrowers are also suing because they say they were deprived of their “procedural rights” when the White House didn’t offer a public forum for people to weigh in on the forgiveness plan before it was rolled out.
Both lawsuits went up to the Supreme Court, which heard arguments earlier this year. Questioning went on for over three hours, and the court’s conservative supermajority did not seem convinced by Biden’s plan. Chief Justice John Roberts noted at three different points that if implemented, the White House’s proposed debt forgiveness plan would cost half a trillion dollars, which he felt is a pretty significant amount of money to spend without congressional approval.
However, there is some hope left for the Biden team. The court’s liberal justices, and a few conservatives too, raised questions about whether the Republican states and the two borrowers that are suing have valid standing to do so. And, as Stern has written, if the court rules against Biden, his Department of Education can go back to the drawing board and announce that it will offer debt relief based on hardship proven by borrowers on a “case-by-case” basis.
The ultimate takeaway: Who knows what to expect! The justices are scheduled to announce decisions the entire month of June, and there’s no way of predicting which day the student debt forgiveness ruling will come or what it’ll say.
2. The Moratorium on Loan Repayments
Thanks to the pandemic, payments on federal student loans have been on pause for three years now. First implemented by the Trump administration right as COVID-19 was declared a global pandemic, the moratorium also set interest rates on all federal student loans to 0 percent.
As the pandemic continued, that moratorium was extended nine times over the course of three years. About 40 million borrowers have benefited from this, but that’s about to come to an end. The White House announced that repayments will resume again (for real this time), but the exact date will depend on the impending SCOTUS decision—the moratorium will be lifted 60 days after the court’s ruling or 60 days after June 30, 2023, whichever comes first.
3. Legislation in Congress
The House recently passed a resolution that seeks to block the president’s debt forgiveness plan and the moratorium on loan payments. The Senate has yet to schedule a vote on it, but almost every Republican senator has already signed on as a sponsor. All of these efforts are likely going to be fruitless, as Biden has already pledged to veto the bill if it reaches his desk.
Republican Rep. Bob Good said that moving forward with legislation against the debt forgiveness plan, even though SCOTUS is already scheduled to decide on it, is one part of a “multipronged attack” that targets Biden’s broader student debt policies. In a press release, Good said that Biden’s plan would cost taxpayers $400 billion, that the moratorium on loan payments has already cost the federal government $195 billion, and that new changes to the income-driven repayment plan have cost $230 billion.
This legislative effort is also forcing moderate Democrats to publicly take a stand on student debt forgiveness. Sens. Joe Manchin, Jon Tester, and Catherine Cortez Masto have expressed concerns with Biden’s plan but haven’t completely bucked their party to join the GOP’s efforts to kill it.
Ultimately, this Congress is not going to have the final say on student debt, nor even will the looming Supreme Court decision. Whatever the court decides, the ball will be right back in President Biden’s court, with the fate of America’s borrowers in his hands.
