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Supreme Court Faces Decision On Debt Relief Plan

A Supreme Court hearing took place on Tuesday regarding President Joe Biden’s recent plan to forgive millions of dollars of student debt. It was not the plan under review itself but President Biden’s actions. Here’s the breakdown of what’s going on:


 


The court case was initiated by six right-leaning states and is to determine whether how President Biden went about creating and enacting his plan was lawful. The decision will likely not be made for months; however, experts believe that it is unlikely that President Biden will win the case. Student loan payments were initially paused in November of last year, with an extended pause added on November 22. 


 


Last year on August 24, President Biden said that the government would cancel up to $20,000 of student loans, a life-changing amount of money for millions of Americans. Months later, the Department of Education started accepting applications from eligible borrowers. 


 


The parameters for qualification fall into two categories: single people earning under $125,000 annually and married couples filing joint taxes or the head of a household earning under $250,000 annually; all will get up to $10,000 removed from their student loan debts. Their annual incomes are calculated from adjusted gross income from 2020 or 2021, but not 2022. Additionally, those who received a Pell Grant are eligible for up to an additional $10,000.


 


The debt relief applies to all loans given before July 1, 2022 and all federal loans - both for undergraduate and graduate education - as well as Graduate PLUS loans and some Federal Family Education Loans (FFEL) if they were a part of the loan pause in 2020.


 


This makes 43 million Americans eligible, with half of those having the remainder of their debt erased. After eligible individuals apply for loan relief, they should receive money in less than six weeks.


 


For now, there is a pause on monthly student loan payments. They will resume either 60 days after the court cases are resolved or 60 days after June 30 this year. 


 


However, this plan is still under review and will likely be denied by the Supreme Court. There is a 6-3 conservative majority in the Supreme Court, and conservative justices are skeptical of President Biden’s plan. 


 


The issue under review is that President Biden was able to enact his plan quickly, bypassing Congress, using the HEROES Act of 2003. This Act says that the Education Secretary can grant relief in an emergency - such as a pandemic. The current Education Secretary, Miguel Cardona, was able to give that relief under the direction of President Biden.


 


The problem with President Biden’s actions is that many people consider them to be an abuse of power; they say the President has exploited the pandemic for his plans. As the project is estimated to cost over $400 million over the next 30 years, Chief Justice John Roberts says this issue should be brought to Congress. Further, Justice Brett Kavanaugh added that Congress had already decided not to pass the plan, which was an illegitimate way for President Biden to make an exception. President Biden countered with the following from the hearing’s legal brief:


 


The [HEROES] Act allows the Secretary to waive or modify existing provisions when necessary to keep certain borrowers from being placed in a worse position about their loans because of a national emergency. But the Program places an estimated 43 million borrowers in a better position by eliminating all loan balances for 20 million and erasing up to $20,000 for over 20 million more.”



However, President Biden’s plan only scratches the surface of the hot topic of student loans and debt, as well as college tuition. There are currently $1.75 trillion in outstanding student loans in the U.S., which continues to creep up under worsening conditions. The cost of college has also significantly increased, with the average public higher education tuition reaching $22,700 in the 2020-2021 academic year and trending to continue to rise.


 



 


Further, since students can take out an infinite amount of loans, colleges can continue to increase their prices. Additionally, this is coming at a time of less government support, causing families to rely more heavily on loans.


 


Another issue is that while college costs are rising, household income is not, leaving a significant gap between one’s earnings and expenses. Young adults also feel pressured to attend graduate school - as the job market becomes more competitive, people want to do all they can to get a leg up. This is also a racial issue as Black students leave school with $25,000 more debt than their white counterparts.


 


In times like these, where a plan is being pushed back and forth for months, political officials often forget about the individuals impacted by this delay. Millions of Americans are stuck in a waiting period, continuously worrying about making payments while affording their day-to-day costs.


 


One instance of this is Jason Doresky, a graduate from the University of Kansas in 2015, now 31. He was eligible to receive debt relief, and last September, the Department of Education sent him $10,000 as a refund for his voluntary loan payments since March 2020. Yet Doresky has left the money in his account because he does not know if he will have to return it. Dorseky said, “To the people making these decisions, $10,000 is not a lot of money. But when it’s a big part of your actual worth or net savings, it matters.”


 


It is clear that the people are passionate about this, as demonstrated by the more than two dozen organizations that protested in front of the Court during the Tuesday hearing. Still, President Biden’s plan would also be a massive shift in government funding and potentially harm the President’s future campaign for a second term of presidency in the 2024 election. As the Supreme Court Justices ponder their decision, they will be forced to grapple with the reality of the situation for millions of Americans - the Justices have their lives in their hands.


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