4 Student Loan Forgiveness Updates After Supreme Court Hearing

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Millions of borrowers are anxiously awaiting updates ahead of a historic Supreme Court hearing that will determine the fate of President Joe Biden’s student loan forgiveness initiative.

Biden’s plan, if it moves forward, would eventually eliminate up to $20,000 in federal student loans for 40 million borrowers. But federal courts blocked the initiative at last after several legal challenges. The administration appealed two of those challenges to the Supreme Court, which held oral arguments last week. It is expected that the court will give its verdict in June.

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Here are some developments.

Biden says he doesn’t believe the Supreme Court will uphold his student loan forgiveness plan

In his first public comments since the Supreme Court hearing, Biden expressed doubt that the Supreme Court would uphold his student loan forgiveness plan.

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“I do believe we are on the right side of the law,” Biden Said to reporters last Wednesday. “I am not yet sure of the outcome of the decision.”

Most Supreme Court justices expressed varying degrees of skepticism — and sometimes even hostility — toward the initiative. Chief Justice John Roberts was particularly concerned about the scope and breadth of the program, and four other conservative justices questioned whether the HEROES Act of 2003, which the Biden administration had authorized, allowed such broad student loan forgiveness. Thought.

But an adverse decision by the court is not a foregone conclusion. The court’s four justices agreed with the Biden administration’s arguments that the challengers lacked standing — the ability to demonstrate that they would suffer a substantive injury as a direct result of the program. Several other judges were vague or silent on the issue of standing. If a Supreme Court majority concludes that the challengers lack standing, they could uphold Biden’s student loan forgiveness plan, even if they disagree that it should be implemented.

There’s No Backup Plan If the Supreme Court Bans Student Loan Forgiveness

Biden administration officials have reiterated that there is no formal backup plan in case the Supreme Court rejects the student loan forgiveness initiative. “We have a plan, this is the plan that we have announced,” said Bharat Ramamurthy, deputy director of the National Economic Council. Comments on Marketwatch upon hearing. The statements made by the officials before the hearing are similar in nature to their comments.

Borrower advocates and some student loan legal scholars have suggested That if the Supreme Court rules that Biden’s program is illegal under the Heroes Act, the administration could mandate the program be reissued in a different form under the Higher Education Act, a separate statute. The HEA has a provision that gives the Secretary of Education fairly broad authority to “compromise, waive, or release any right, title, claim, lien, or demand” associated with federal student loans. The administration has relied on this so-called “compromising authority” before to discharge federal student loans on a smaller scale.

The HEA’s compounding authority was raised during a Supreme Court hearing last week, and at one point, challengers even said the HEA would be a better authority for the Biden administration to implement wide-scale student loan forgiveness .

However, the process of reinstating Biden’s student loan forgiveness program under the HEA’s compromise authority could be difficult and lengthy. While the HEROES Act allows the Department of Education to bypass normal regulatory processes and quickly issue new regulations if they are sufficiently justified by a national emergency, the HEA requires a time-consuming notice and comment period for new regulations. will be needed. The administration would also need to comply with a number of other procedural requirements, potentially pushing the relief back by a year or two.

Education Department sends message to borrowers on student loan waiver and repayment

Following the Supreme Court hearing, the Department of Education sent a mass email trying to reassure borrowers that Biden’s student loan forgiveness plan is legal, and the administration will continue to try to provide relief.

Education Secretary Miguel Cardona wrote in an email to more than 6 million borrowers, “Our administration is confident in our legal right to adopt this plan, and made clear today that opponents of the program have the right to bring their case to court.” There is a lack of standing for.” “While opponents of this program will deny relief to millions of working and middle-class Americans, we are fighting to provide relief to borrowers who need support as they get back on their feet after the economic downturn caused by the pandemic.” Have come.”

“We will continue to provide you with updates and notify borrowers directly before payments resume,” Cardona continued, adding that payments will resume 60 days after the Supreme Court announces its decision. If it hasn’t made a decision or resolved the litigation by June 30, then payments will resume 60 days after that.

Another federal court allows separate student loan forgiveness initiative to move forward

While all eyes were on the Supreme Court last week, a separate student loan forgiveness legal dispute was resolved in favor of hundreds of thousands of borrowers.

A federal district court in California last week rejected a challenge to a previously approved settlement agreement. Sweet v. Cardona, A class action lawsuit where borrowers alleged that in two administrations the Department of Education unreasonably delayed or denied relief under the repayment program from Borrower Defense. The Borrower Defense Program can provide student loan forgiveness to those who were misled or defrauded by their schools.

Soon after the decision, the Department of Education began notifying borrowers that they are eligible for loan relief, which could include student loan forgiveness, payment refunds and credit repair. More than 200,000 borrowers are expected to receive $6 billion in student loan discharge over the next year. These discharges are separate from Biden’s student loan forgiveness initiative that will be decided by the Supreme Court.

Further Reading Student Loan Forgiveness

Biden’s student loan forgiveness plan could be in trouble after Supreme Court hearing

Borrowers Receive Student Loan Forgiveness Approval Emails After Court Green-Lights Settlement

What happens if the Supreme Court rejects Biden’s student loan forgiveness plan?

Republican senators file bill to end student loan moratorium, stop loan forgiveness

Credit: www.forbes.com /

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