Another Legal Route to Cancel Student Loans Gets SCOTUS Spotlight

  • One challenger to Biden’s student loan relief argued that he could have used the Higher Education Act of 1965 to cancel student loans.
  • Biden used the HEROES Act for relief, relying on a national emergency.
  • Biden’s team said there was no evidence the Education Secretary would pursue that alternative route.

One of the challengers to President Joe Biden’s student loan forgiveness says the president could use a different law to get relief for millions of borrowers. Biden’s own team is unsure.

The Supreme Court on Tuesday heard oral arguments in two cases that halted Biden’s plan to cancel up to $20,000 in student loans for federal borrowers. The first case the court heard was brought by six Republican-led states that argued the relief would hurt their state’s tax revenue. The second lawsuit was filed on behalf of two student borrowers who sued because they did not qualify for the full $20,000 in relief.

The questioning in two of the cases focused on Biden’s use of the HEROES Act of 2003 to cancel student loan debt, which gives the Secretary of Education the ability to cancel or modify student loan balances that relates to a national emergency. The second case also included the plaintiffs’ argument that the president could have used the Higher Education Act of 1965 to cancel student debt — without relying on a national emergency for relief.

When liberal Justice Ketanji Brown Jackson pressed for evidence that the Secretary of Education would pursue the Higher Education Act as an alternative route, the borrowers’ attorney, J. Michael Connolly, said “there’s all kinds of evidence.”

“During the campaign, they talked about doing broad-based debt relief,” he said. “This has nothing to do with the pandemic. Senator Warren and others have passed resolutions urging the Secretary to use the Higher Education Act to pass debt forgiveness. Scholars have written about it.”

But Solicitor General Elizabeth Prelogar, on behalf of Biden, told Jackson that Connolly’s claim was invalid.

“It’s pure speculation on their part to suggest that if the Secretary is blocked from taking this action, maybe he’ll find another source of authority and issue a different program under that source of authority, ” he said. “And I think that shows that their theory is very speculative here.”

He added in closing arguments that Biden’s relief “is a pandemic-related program. It specifically targets national emergency situations that have a profound financial impact on student loan borrowers. from COVID .”

As Prelogar has insisted, and the Biden administration has maintained, relief under the HEROES Act is allowed and necessary to help borrowers recover from the pandemic. But Biden himself said Wednesday he wasn’t sure the conservative-majority Supreme Court would agree, suggesting he would have to pursue another route to get relief for millions of borrowers.

“I’m confident we’re on the right side of the law,” Biden told reporters Wednesday. “I’m still not confident about the outcome of the decision.”

HEROES Act vs. Higher Education Act

The Higher Education Act of 1965 contains a compromise-and-settlement authority, which states that the Department of Education may “enforce, pay, compromise, waive, or release any right, title, -claim, lien, or demand” related to a federal student loan. .

So unlike the HEROES Act, the Higher Education Act will allow the cancellation of loans in non-emergencies like COVID-19.

Before Biden’s relief announcement, the Legal Services Center at Harvard Law School wrote a memo for Massachusetts Sen. Elizabeth Warren explaining why the Higher Education Act would give the Secretary of Education the authority to cancel student loans for the most part, and Warren – along with other Democrats. lawmakers — introduced a resolution in 2021 urging Biden to use that authority to implement broad debt relief.

As the Prelogar and Biden administrations have reiterated, however, this relief is specifically intended to help Americans recover from the financial effects of the pandemic, so it uses the HEROES Act — and it’s not looking at one backup plan if the Supreme Court stops. the relief.

“It is indisputable, my friends are not disputing that if that forbearance policy ends, and it will not continue indefinitely, if it does end, there will be millions of borrowers who will be in a worse position because of the COVID part of their ability. to pay off their debts,” Prelogar said.

“Already, 26 million people have applied for this aid, and 16 million people have been approved to receive it,” he added. “For Americans, this is a critical lifeline to ensure they are not subject to the severe negative consequences of student loan debt delinquency and default.”

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