The Biden administration defended its plan to wipe out hundreds of billions of dollars in student debt in a brief filed with the U.S. Supreme Court on Jan. 4, arguing it has the executive authority to do so.
In its court filing (pdf) on Wednesday, lawyers for the administration argued that challenges to the plan should be thrown out because they lack legal standing.
As it has done previously, the administration argued it has the authority to authorize the debt relief plan under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, which allows the Department of Education to grant waivers or relief to recipients of student financial aid programs under Title IV of the Higher Education Act of 1965 “in connection with a war or other military operation or national emergency.”
“In any event, the HEROES Act does authorize the student-loan-relief plan… the Secretary’s actions fall comfortably within the plain text of the Act,” the filing states. “Accordingly, the Secretary’s undisputed compliance with the procedural requirements of the HEROES Act refutes” the challenges made to the plan, lawyers for the government wrote.
Biden in August announced that his administration would cancel up to $10,000 in student loan debt for individuals making less than $125,000 a year, or as much as $20,000 for eligible borrowers who were also Pell Grant recipients.
Married couples would see $250,000 in debt wiped out under the program.
Republican States File Lawsuit Against Student Debt Plan
However, a number of Republican-led states, led by Nebraska and Missouri, and business groups filed a lawsuit against the loan forgiveness plan, which comes in the midst of soaring inflation, contesting that it is illegal.
The Supreme Court has agreed to hear two of those legal challenges.
The first was filed by six GOP-led states bought against Biden and Education Secretary Miguel Cardona contesting that the forgiveness plan is unconstitutional and cannot be rolled out without authorization from Congress, and that it will unfairly burden working-class families, and will further worsen inflation.
The second lawsuit was filed by the Job Creators Network Foundation Legal Action Fund, a small-business advocacy group, on behalf of two Texas individuals who have been “harmed by this arbitrary executive overreach.”
They argue that the plan is counterproductive, inflationary, and is in violation of the Administrative Procedure Act’s notice-and-comment procedures, through which the administration should have first sought the public’s input or comment on the program.
The Congressional Budget Office, a federal agency, estimates Biden’s student loan relief plan will cost the federal government more than $400 billion over the next 30 years.
In a statement in December, the Job Creators Network said the student debt relief program will open the floodgates for students who will be able to borrow knowing they won’t have to pay it back later, a dynamic they said that “colleges will surely take advantage of.”
Biden Administration ‘Confident’ in Legal Authority to Adopt Debt Program
“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,” the Justice Department wrote in its filing.
“For nearly three years, the Secretary and his predecessors have responded to an unprecedented global pandemic by adopting and extending an unprecedented across-the-board pause in payment obligations for all borrowers,” the government wrote. “The Secretary determined, and respondents have not seriously disputed, that ending that pause without providing some additional relief for lower-income borrowers would cause delinquency and default rates to spike above prepandemic levels.”
“This Court should not compel that damaging and destabilizing result,” lawyers wrote, adding that the lawsuits filed against the plan lack legal standing and that the Department of Education’s plan is “lawful in any event.”
The Supreme Court has agreed to hear oral arguments on the loan forgiveness plan on Feb. 28 and a ruling on the matter is set to be made in June, but in the meantime the plan has been put on hold.
Applications for the program opened in October last year and borrowers initially had until Dec. 31, 2023, to submit an application but the website stopped accepting applications in November after a court in Texas struck down the plan.
Prior to the website closing, around 26 million Americans applied for the relief, according to CNBC. More than 16 million of those who applied have already been approved for debt relief, Reuters reports.
In a statement on Wednesday, U.S. Secretary of Education Miguel Cardona said the Biden administration “remains committed to fighting to deliver essential student debt relief to tens of millions of Americans.”
“We remain confident in our legal authority to adopt this program that will ensure the financial harms caused by the pandemic don’t drive borrowers into delinquency and default. We are unapologetically committed to helping borrowers recover from the pandemic and providing working families with the breathing room they need to prepare for student loan payments to resume,” the statement said.