SCOTUS set to hear cases against student loan forgiveness for which Biden admin approved over 16M

The Biden administration approved over 16 million people for the president’s student loan forgiveness plan which will come before the U.S. Supreme Court on February 28 as it hears arguments from a number of plaintiffs who are against the bailout.

(Video Credit: Forbes Breaking News)

According to the US Department of Education over 60% of the 26 million Americans who applied for relief have had their loans forwarded to services for discharge. That doesn’t mean their loans will be forgiven. Lawsuits from six states and two individuals filed against the Department of Education have thrown a wrench into President Biden’s socialist plan.

The bailout has been on hold since October when the Court of Appeals for the 8th Circuit delivered an emergency order to stay the Biden administration’s student loan cancellation plan. After a Texas judge blocked the relief plan in a separate ruling, the Department of Education stopped taking applications for student loan forgiveness as they wait for an outcome from the Supreme Court.

“Courts have issued orders blocking our student debt relief program,” a statement from the student loan online application page announced. “As a result, at this time, we are not accepting applications. We are seeking to overturn those orders.”

President Biden announced his student loan forgiveness plan last August. It would ostensibly forgive up to $10,000 for most federal student loan borrowers and up to $20,000 for those who received Pell Grants. In order to qualify, borrowers can’t make more than $125,000 per year if filing single or $250,000 if married and filing jointly.

By October, legal challenges were piling up against the forgiveness plan. On Oct. 21, the 8th Circuit court issued a temporary block on the relief plan after Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina sued the Biden administration over the plan. They claimed the student loan relief plan is unlawful and would harm their tax revenues.

The Department of Education countered with its own court filing asserting that four of the states involved who claim the discharge of student loans would affect their tax revenues have no standing because those loans would be discharged between 2021 and 2025 and are not taxable income.

The DOE claimed that the “alleged harm is self-inflicted; a federal policy’s incidental effects on a state’s tax revenues are not judicially cognizable injuries.”

The two cases brought by individuals claim that the plan is unlawful because it made them partially or completely ineligible for the full range of benefits. The DOE asserts that vacating the plan would make the plaintiffs’ financial situation unchanged or worse than before.

The Biden administration seems very confident the Supreme Court will allow the plan. The Department of Education said in a brief that it believes the “plain language of the HEROES Act authorizes the plan.” The Higher Education Relief Opportunities for Students (HEROES) Act of 2003 allows the Education Department to grant widespread student loan relief during national emergencies. They are using the pandemic as a vehicle to push for student loan forgiveness.

Plaintiffs are arguing that the president’s proposal doesn’t meet the HEROES Act’s requirement for “a real connection to a national emergency.” The plan is estimated to cancel approximately $441 billion in federal student loan debt and eliminate balances for 40.5% of federal borrowers, according to a report by The Federal Reserve Bank of New York.

An ongoing pause on federal student loan payments and interest rate accumulation is still occurring. If the issue is not resolved by June 30, 2023, student loan payments will resume 60 days after that.

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