Biden Administration Makes Emergency Appeal to Supreme Court on Student Loan Forgiveness

“The Eighth Circuit’s erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations,” U.S. Solicitor General

Elizabeth Prelogar

wrote in the government’s filing.

At this stage, the Supreme Court won’t be giving full consideration to whether the debt relief program is legal, but practically speaking, the court’s decision on the administration’s request could determine the fate of President Biden’s signature program. If the court leaves the initiative on hold while legal challenges continue, the program is likely to remain shelved for many months. 

Ms. Prelogar said that if the Supreme Court denies the administration’s emergency request, the justices should consider taking up the full case now so they could reach a final decision before the end of the court’s term in June.

The court gave the state challengers until Wednesday to file a response to the Biden administration’s request.

Mr. Biden “can’t unlawfully saddle the college loan debt on millions of hardworking Americans who don’t owe the debt!” Arkansas Republican Attorney General Leslie Rutledge said on Twitter. “I’ve gone all the way to the Supreme Court before to win & I’ll do it again.”

Under the terms of Mr. Biden’s program, borrowers who make under $125,000 a year, or $250,000 for a married couple, are eligible for up to $10,000 in federal student debt relief. Private loans, which make up less than 10% of all outstanding student debt, wouldn’t qualify unless they had already been consolidated into a federal loan. Borrowers who received Pell Grants would be eligible for another $10,000 in relief.

In issuing its injunction, the Eighth Circuit cited the potential “irreversible impact” of allowing debt forgiveness to proceed before its legality was resolved.

That ruling turned on the preliminary issue of whether any of the six states had legal standing to challenge it. The appeals court said that at least the state of Missouri likely had a proper basis for bringing the case.

The Biden administration also has appealed a ruling by a federal judge in Texas that blocked mass debt forgiveness after two borrowers, backed by a conservative group, sued over its eligibility requirements. U.S. District Judge Mark Pittman, a Trump appointee, said the Biden administration had acted unconstitutionally by using legislative powers that are only available to Congress.

The administration said that it would seek to have the Supreme Court intervene in that case as well if an appeals court didn’t grant its request to put that ruling on hold.

The administration has said that it has income information on hand for around 26 million student-loan borrowers, and would be ready to cancel debt for millions of borrowers as soon as a court allows it to do so. The Education Department stopped accepting new applications for the program following the Texas ruling.

The Congressional Budget Office estimated that the program would wipe out around $430 billion of the $1.6 trillion in outstanding federal student loans. The Biden administration says the debt relief would cost $379 billion over 30 years, while other estimates have put the price tag around $500 billion.

Biden administration lawyers have argued that a 2003 federal statute known as the Heroes Act gives the Education Department broad authority to waive or modify federal student-loan provisions to address financial hardship arising out of the Covid-19 pandemic. Both the Trump and Biden administrations cited the same law as the authority to suspend student-loan repayments and interest accrual during the pandemic.

Write to Gabriel T. Rubin at [email protected]