Supreme Court weighs Biden’s billion-dollar student loan plan

WASHINGTON (AP) – The U Supreme Court takes on a partisan legal fight President Joe Biden’s plan to eliminate or reduce student loans held by millions of Americans.

The High Court, with its 6-3 conservative majorityis heard arguments Tuesday in two challenges to the plan, which until now has been blocked by judges appointed by Republicans in the lower courts.

The arguments are expected to last two hours, but probably go much longer. The public can hear in the the court website.

Twenty-six million people have applied and 16 million have been approved for up to $20,000 in federal student loans, the Biden administration says. The program is estimated to cost $400 billion over 30 years.

“I am convinced that the legal authority to bring this plan is there,” Biden said Monday, at an event to mark Black History Month.

The president, who once doubted his own authority to largely cancel student debt, first announced the program in August. Legal challenges quickly followed.

Republican-led states and lawmakers in Congress, as well as conservative legal interests, are lining up against the plan as a clear violation of Biden’s executive authority. Democratic-led states and liberal interest groups are supporting the Democratic administration in urging the court to allow the plan to go into effect.

Without it, loan defaults will rise sharply when the break on loan payments ends no later than this summer, the administration says. Payments were suspended in 2020 as part of the response to the coronavirus pandemic.

The administration says a 2003 law, commonly known as the HEROES Act, allows the secretary of education to waive or modify the terms of federal student loans in connection with a national emergency. The law was primarily intended to keep service members from becoming worse off financially while fighting in wars in Afghanistan and Iraq.

Nebraska and other states that have sued say the plan is unnecessary to keep the default rate nearly where it was before the pandemic. The 20 million borrowers who have written off their entire loans would have a “windfall” that will leave them better off than before the pandemic, states say.

Dozens of borrowers came from all over the country to camp near the court on a dry Monday evening in the hope of getting a seat for the arguments. Among them was Sinyetta Hill, who said Biden’s plan would wipe out all but about $500 of the $20,000 or more he has in student loans.

“I was 18 when I signed up for college. I didn’t know it was going to be such a big burden. No student should have to deal with this. No person should have to deal with this,” said Hill, 22. who plans to study law after graduating from the University of Wisconsin-Milwaukee in May.

Biden’s plan could meet a frosty reception in the courtroom. Conservatives on the court are skeptical of other Biden initiatives related to the pandemic, including vaccination requirements and pauses on evictions. Those were widely billed as public health measures aimed at slowing the spread of COVID-19.

The loan forgiveness plan, on the other hand, is intended to counter the economic effects of the pandemic.

The national emergency is expected to end on May 11, but the administration says the economic consequences will persist, despite historically low unemployment and other signs of economic strength.

In addition to the debate on the authority to forgive student debt, the court also faced whether the states and two individuals whose challenge is also before the judges have the legal right, or standing, to sue.

Generally, parties must demonstrate that they would suffer financial loss and benefit from a court decision in their favor. A federal judge initially found that the states would not be harmed and dismissed their lawsuit early an appeals panel said the case could proceed.

Of the two individuals sued in Texas, one has student loans that are commercial and the other is eligible for $10,000 in debt relief, not the $20,000 maximum. They would have nothing if they won their case.

A decision is expected at the end of June.


Associated Press writers Jessica Gresko and Collin Binkley contributed to this report.

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