The Supreme Court began hearing arguments both for and against President Biden’s student debt relief plan - which could see millions of borrowers’ loans wiped away or reduced - on February 28th, though there will not be a decision for months. So far, six states are in opposition, those being Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina.
The student debt forgiveness plan, which was announced in August 2022, would cancel $10,000 in federal student loan debt for those who make less than $125,000 or households with an annual income of less than $250,000. Recipients of the Pell Grant, which provides additional financial support for students who show exceptional financial need, will have an additional $10,000 forgiven from their debt.
According to the White House, 26 million people have applied for the debt forgiveness, and so far, 16 million have been approved. The Congressional Budget Office has stated that the program will cost approximately $400 billion over the next three decades.
To cancel student loan debt, the government relies on the Higher Education Relief Opportunities for Students Act. Originally, this Act was passed following the Sept. 11, 2001 terrorist attack, the law was initially intended to keep military service members from being financially worse off while fighting in wars in Afghanistan and Iraq. It has since been extended to allow the secretary of education to waive or modify the terms of federal student loans as necessary when a national emergency is in effect.
Former President Donald Trump declared the COVID-19 pandemic a national emergency in March 2020. President Biden has announced that designation will end on May 11, 2023, however, the Biden administration claims that the end of the national emergency designation will not change the legal argument for the cancellation of student loan debts, as millions of students were affected by the pandemic.
It will likely be months before borrowers of federal student loans learn the outcome of the case, though there is sort of a loose deadline, that being the end of June before the Supreme Court goes on summer break. While federal student loans are currently paused, that will end 60 days following the resolution of the case. If the case has not been resolved by June 30th, payments will resume 60 days after that.