On February 28, 2023, the United States Supreme Court will hear arguments on Student Debt Cancellation Plan from Republican officials and special interests attempting to block President Biden’s plan to cancel up to $20,000 in student loan debt for millions of Americans. This cancellation program aims to provide targeted relief to working- and middle-class Americans, which would advance racial equity, help borrowers of all ages, and completely wipe out student debt for up to 20 million people. However, right-wing judges halted cancellation nationwide based on spurious legal challenges.
This blog post argues why the Supreme Court should uphold President Biden’s student debt cancellation plan based on Senator Elizabeth Warren research Report on the Student Debt.
Event by Event student Debt Cancellation Plan
In August 2022, the Biden-Harris Administration announced a significant decision to provide student debt relief to millions of borrowers who need it the most. The three-part plan involves canceling up to $20,000 in debt for as many as 43 million borrowers, creating a new income-driven repayment (IDR) plan for current and future borrowers, and holding colleges accountable for raising costs. The reforms aim to ease the burden of student debt on working and middle-class families, with nearly 90 percent of the cancellation dollars going to borrowers making less than $75,000 per year.
On October 17, 2022, the application for student debt cancellation officially became available, and by December 1, 2022, close to 26 million people had applied for the President’s loan cancellation program, with 16 million already approved. However, on November 11, 2022, a federal judge in Texas blocked President Biden’s student debt cancellation plan, endangering the possibility of relief for millions of borrowers.
The judge claimed that the cancellation plan was an “unconstitutional exercise of Congress’s legislative power,” ignoring the President’s clear authority under the HEROES Act. On November 14, 2022, a panel made up of three Republican appointees from the U.S. Court of Appeals for the Eighth Circuit sided with a coalition of six Republican-led states to institute an emergency injunction against student loan relief. In both cases, the courts halted relief for all borrowers who had applied and blocked any additional borrowers from applying.
On December 19, 2022, the Supreme Court announced that justices would hear oral arguments in both cases challenging President Biden’s student debt cancellation plan on February 28, 2023. Before the Republican lawsuits froze the cancellation program, more than 98 percent of applications came from ZIP codes where the average income is under $75,000, and about two-thirds were from neighborhoods with an average income below $40,000. More applications per capita came from communities of color than from majority-white communities.
If not for the courts and Republican efforts to stop the President’s plan, roughly 16 million Americans would already have seen up to $20,000 of their student debt cancelled. One in four Black borrowers and almost half of Latino borrowers would be on track to see their entire student debt balance cancelled, while borrowers who have struggled with debt without having earned a degree would be seeing much-needed relief. However, these partisan and legally tenuous attempts to block the President’s authority have left these borrowers in limbo. Without cancellation, millions of Americans’ monthly costs could rise dramatically once student loan payments resume.
On January 11, 2023, a historic coalition of cities, states, experts, and advocacy groups filed over a dozen amicus curiae briefs with the Supreme Court in support of President Biden’s student debt relief program. The briefs represented a wide array of perspectives from across the political and ideological spectrum and presented compelling arguments that showcased broad public support for the program while affirming the strength of the President’s legal authority to cancel student debt.
To better understand the stakes of the upcoming Supreme Court decision, Senator Warren sent an inquiry on January 17, 2023, to leading higher education, consumer advocacy, and economic justice groups seeking information about how the efforts to block President Biden’s student debt cancellation plan have affected the 43 million borrowers who are due relief.
The Senator asked the organizations about how the courts’ delay of student loan relief has impacted the organizations’ members and what this relief would mean for them. Senator Warren’s office received over a dozen unique responses from groups, including 1000 Women Strong, Alliance for Justice, the Debt Collective, the National Association for the Advancement of Colored People (NAACP), the National Consumer Law Center
On February 28, 2023, the United States Supreme Court will hear arguments from Republican officials and special interests attempting to block President Biden’s plan to cancel up to $20,000 in student loan debt for millions of Americans.
Brief on Student Debt Relief Plan and Present status
The Biden-Harris Administration’s Student Debt Relief Plan is a three-part plan to help working and middle-class federal student loan borrowers’ transition back to regular payment as pandemic-related support expires.
- Part one is the final extension of the student loan repayment pause, which has been extended a number of times due to the economic challenges created by the pandemic.
- Part two provides targeted debt relief to low- and middle-income families. The U.S. Department of Education will provide up to $20,000 in debt relief to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt relief to non-Pell Grant recipients if their individual income is less than $125,000 or $250,000 for households.
- Part three aims to make the student loan program more accessible, affordable, and transparent.
While courts have issued orders blocking the student debt relief program, the administration is hopeful that the Supreme Court will rule in their favor and allow them to move forward with the debt relief program. The pause will end 60 days after the Supreme Court makes a decision on the case, and if no decision has been made by June 30, 2023, payments will resume 60 days after that.
The program aims to address the financial harms of the pandemic, provide borrowers with a smooth transition back to repayment, and help borrowers at highest risk of delinquency or default once payments resume.
Clear Legal Authority
The President has clear authority to cancel student debt based on his authority under the HEROES Act of 2003, which grants the Secretary of Education authority to grant relief from student loan requirements during a national emergency, such as the COVID-19 pandemic. According to the Alliance for Justice, the legislation was intended to provide exactly this kind of authority to the Secretary of Education to waive and modify student loan provisions in this way.
And according to the National Consumer Law Center, the HEROES Act, by its plain language, authorizes the Administration “to waive or modify” any federal student loan obligations “as the Secretary deems necessary in connection with” a national emergency to ensure that student loan borrowers “are not placed in a worse position financially.” That is exactly what President Biden’s student debt relief plan would do. Therefore, the challenges to President Biden’s student relief plan are simply an exercise in partisan judicial activism.
Targeted Relief for Low- and Middle-Income Borrowers
President Biden’s student debt cancellation plan will provide targeted relief to low- and middle-income borrowers and offer financial freedom from crushing student loan burdens. Low- and middle-income student loan borrowers and those from historically underrepresented communities have the most to gain from cancellation. Student debt cancellation is particularly helpful for borrowers who struggle the most with repaying their loans: Black borrowers, borrowers who didn’t get a degree, and those who have defaulted on their student loans.
Research from the Federal Reserve Bank of New York found that “lower-income, less educated, non-white, female and middle-aged borrowers will struggle more in making minimum payments” when the payment pause ends. Therefore, canceling student debt will have a significant impact on these communities, advancing racial equity, and creating opportunities for borrowers.
Uncertainty among Vulnerable Borrowers
Spurious legal challenges to President Biden’s student debt cancellation plan are causing financial anxiety and uncertainty among vulnerable borrowers. Borrowers have indicated that the legal challenges to student debt cancellation are creating a “perilous limbo” in which they do not know if or when to expect the relief they deserve. Borrowers described the impact of this legal uncertainty.
One wrote that, “Upon hearing that this process is currently on hold left me in a deep state of depression. I felt as though I saw a possible ray of hope….For once, I could finally imagine myself owning a home one day and for this debt to possibly get paid off at some point in my life.” Another wrote that “it’s frustrating to feel like there is no clear path to paying off my loans and creating a stable financial future for myself.”
President Biden’s student debt cancellation plan is an important program that would help millions of Americans achieve financial freedom and advance racial equity. The spurious legal challenges to President Biden’s student relief plan are simply an exercise in partisan judicial activism. It is clear that the ongoing legal challenges to President Biden’s student debt cancellation plan are causing real harm to millions of borrowers who are struggling to make ends meet. The Supreme Court should uphold President Biden’s authority under the HEROES Act of 2003 and allow this program to proceed.
Canceling student debt will help vulnerable communities, lift financial burdens, and create new opportunities for borrowers. The Supreme Court must recognize the clear authority of the President and uphold his plan to cancel up to $20,000 in student loan debt for millions of Americans. It is time to put the financial wellbeing of the American people ahead of partisan politics and ideological obstructionism.
Source: Senator Elizabeth Warren research Report