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Biden administration asks Supreme Court to let student loan forgiveness plan stand

Supreme Court to hear case on student loan relief
Supreme Court to hear case on Biden's student loan forgiveness program in 2023 00:22

Washington — The Biden administration on Wednesday urged the Supreme Court to uphold its plan to forgive up to $20,000 in student loan debt, arguing lower court decisions blocking the program have left millions of borrowers in limbo.

The Supreme Court will hear arguments at the end of February in a pair of challenges to President Biden's student loan forgiveness program, one brought by a coalition of six Republican-led states and a second brought by two borrowers from Texas with outstanding student loans.

The high court will weigh whether the states and borrowers have legal standing to challenge the lawfulness of the plan, as well as whether it exceeds Secretary of Education Miguel Cardona's authority and was adopted in a "procedurally proper manner."

In a filing to the court, the Justice Department argued the student loan relief program is lawful and urged the justices to reject "convoluted theories" put forth by the challengers to assert that they are injured by the plan.

"The lower courts' orders have erroneously deprived the secretary of his statutory authority to provide targeted student-loan debt relief to borrowers affected by national emergencies, leaving millions of economically vulnerable borrowers in limbo," Solicitor General Elizabeth Prelogar wrote.

Prelogar noted a determination by Cardona that ending a pause on student loan payments — put in place during the COVID-19 pandemic — without additional relief for lower-income borrowers would lead to a spike in delinquency and default rates.

"This court should not compel that damaging and destabilizing result: respondents do not have Article III standing, and the secretary's plan is lawful in any event," she said.

The two cases before the Supreme Court arose from emergency requests from the Biden administration asking the justices to lift lower court orders blocking implementation of the plan and allow it to be reinstated. The court in December announced it would hear oral arguments in the disputes and expedited their consideration, leaving the program on hold as it considers them.

The president extended the pause on federal student loan payments until June 30, giving the Supreme Court time to consider the cases.

Mr. Biden announced in August his program canceling up to $10,000 in federal student debt for Americans earning less than $125,000 per year, and an additional $10,000 for recipients of Pell Grants, which are awarded to students with the greatest financial need. More than 26 million people have already applied for forgiveness, and 16 million applications have been approved, according to the Department of Education.

The White House estimated that up to 43 million borrowers will be provided relief under the administration's plan, of which nearly 20 million people will have their remaining debt fully canceled.

After the debt forgiveness plan was announced, the Departments of Justice and Education issued memos detailing the legal authority for student debt cancellation, relying on a 2003 law called the HEROES Act, enacted after the Sept. 11, 2001, terror attacks. The law, the Biden administration argued in the memos, vested Education Secretary Miguel Cardona the authority to grant relief to federal student loan recipients during national emergencies, like the COVID-19 pandemic.

But the student loan forgiveness program quickly was challenged in federal courts, including by the coalition of six states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — in a case from Missouri, and borrowers Myra Brown and Alexander Taylor, filed in Texas.

In the court fight involving the states, the group argues the plan will hurt revenues earned from servicing federal loans. But a federal district court in Missouri dismissed the suit for lack of legal standing. The U.S. Court of Appeals for the 8th Circuit then granted a request from the states to block implementation of the plan, prohibiting the Department of Education from discharging any student loan debt under the program.

In the battle brought by Brown and Taylor, the two claimed Cardona improperly promulgated the plan without notice-and-comment rulemaking, depriving them of the opportunity to comment on the program. Brown is not eligible for relief under Mr. Biden's plan, as her loans are held by commercial entities, while Taylor is eligible for $10,000 in loan forgiveness. 

A federal district court in Texas sided with the borrowers, ruling the plan is unlawful and stopping the Education Department from canceling any debt. The Justice Department appealed, but the U.S. Court of the Appeals for the 5th Circuit denied its request to stay the lower court's order while legal proceedings played out.

The Justice Department told the Supreme Court that on the issue of standing, the states claim injuries that are "highly speculative, that they have inflicted upon themselves, or that fall upon a third party that is a stranger to this litigation." Brown and Taylor, meanwhile, "purport to assert that the plan injures them because it provides too little debt relief, but seek a remedy that would result in no debt relief at all," Prelogar wrote.

She also argued the relief plan is lawful, as it "falls squarely within the plain text of the HEROES Act."

"[The challengers'] arguments rest on manufactured limits nowhere to be found in the act; revisionist accounts of the act's purpose and history flatly contradicted by the act itself; strained readings of other provisions in other statutes; and mischaracterizations of the plan and the analysis on which it is based," Prelogar argued. "Nothing in the text, purpose, or history of the act undermines the most natural reading of its operative provisions, and the secretary's plan readily satisfies the act's requirements."

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