The conservative Supreme Court justices viewed President Joe Biden’s controversial plan to forgive $20,000 in federal student loans to some borrowers and erase nearly half a billion in debt on Tuesday.
Biden made the announcement in August last year, right before the midterm elections. As Congress was unable to pass a longer-term proposal, he had been under increasing pressure from Democratic lawmakers.
It is unclear whether the debt forgiveness helped Democrats win that election, but the one-sided nature of the plan was a major sticking point for Supreme Court justices, who have been skeptical about Biden’s authority without congressional approval.
I was surprised by one takeaway from Tuesday’s hearing: Justice Amy Coney Barrett sounded like she could swing the vote.
Oral arguments were heard in two cases that challenged the program. One was brought by Republican-led states, and the other by two individuals who didn’t qualify for full forgiveness. Many conservative justices were concerned about fairness, executive excess and how states could bring suit.
This forgiveness should be given to borrowers, not to people who have worked hard to pay off debts early or were unable take on more debt.
These are valid questions and the idea that debt forgiveness will split the country in half is a good one. National exit polling for the 2022 midterm elections showed that 50% of midterm voters – mostly Democrats – supported Biden’s plan to reduce debt, while 47%, mostly Republicans, opposed it.
student loan: This won’t solve a larger problem.
Justice Sonia Sotomayor, at Tuesday’s arguments, was particularly interested in the millions of people that the potential debt forgiveness might affect. Many of them didn’t have the same support networks during the pandemic as others.
She said that they don’t have any family or friends who could help them pay these bills. She said that those who are in debt will be affected by the pandemic in a way others won’t.
student loan: Multigenerational issue
She writes that more than $1.6 trillion is owed to the government. This compounding figure has skyrocketed with higher education costs.
Because graduates are more likely to make more than those who don’t graduate, taking on debt is an investment. However, debt can be a problem for many years. People 50 years and older owe nearly 25% of all debt.
It is possible to forgive debts and address racial inequalities. Black graduates tend to have higher debt loads than others, which makes it more difficult for them to capitalize on their degree.
Although Biden’s proposal is a significant step, it is not as complete as a congressionally approved program. It would also only take a small amount from the larger balance sheet, and would not address the root problem of college costs.
student loan: Debt details
Biden approved up to $10,000 in federal debt forgiveness to most eligible borrowers, and up to $20,000 for borrowers who received Pell grants while they were enrolled in college. This means that the program is targeted at people with lower incomes trying to get into the middle class.
It is remarkable to see the interest in forgiveness:
- More than 40,000,000 borrowers are eligible.
- 26 Million people have already applied.
- 16 million have been approved already.
These people are from all parts of the country. This is a point that the White House attempted to emphasize when it released a list by congressional district of potential applicants.
This should not be passed by Congress. Perhaps not
Chief Justice John Roberts argued that something that would affect so many people and be so costly should come from Congress.
Roberts stated, “And if the haven’t taken action on it then maybe that’s an important lesson to teach the president or the administrative Bureaucracy that they shouldn’t undertake it on their own.”
Administration points to 9/11-era legislation that allows the secretary for education to have great power during a national emergency. In this case, the pandemic. Recent court decisions have been skeptical about Covid-related emergency arguments.
student loan: August is a good month to plan
Whatever happens in court, the pandemic-related pause to federal student loan payments for almost three years that was in effect for all borrowers will end at some point. You should start planning for the return of long-deferred loans payments.
According to the Department of Education, payment will be resumed as soon as the court’s decision is made. This was 60 days after the last pause ended on June 30, which is the date the Supreme Court is expected make its decision. This means that loan payments may be required again as soon as August is over.
student loan: Each loan story is different
Destiny Perry is a first-generation college student at Morgan State University, Baltimore. She lives with her parents in a single-parent household.
“Right now I have taken out many loans. Perry stated that he is out here to help students get through college without worrying about the payment.
Perry stated that she is looking into scholarship options to help offset her debt but it won’t be enough to graduate debt-free.
Glen Lopez, a Morgan State freshman, described student debt as a “creeping feeling.”
“Well, what I was telling you is a story that is definitely not an anomaly.” The Massachusetts Democrat stated that this is a systemic crisis – a crisis of nearly $2 trillion that has engulfed all walks of life.
“Like the millions of Black borrowers, and I was growing as a single parent child, I was forced to take out loans due to financial strain. Although I defaulted on the loans, I was able to pay them off after a long time. Even though I was working and living paycheck to paycheck, I couldn’t make ends meet. She said, “I couldn’t get ahead.”
Pressley responded to critics’ argument that people should repay the loans they take out.
“People are struggling to keep up with rising costs, despite their Herculean efforts in multiple jobs.” She said that they are treading water and that we can do something about this.
student loan: Harbinger for a new age
It is important to ask whether the six Republican states and the two borrowers are “standing” to file the cases. This refers to the legal right to bring the dispute in the first place. These residents would actually benefit from the forgiveness.
Vladeck argues that their hostility towards this program could lead them to “really weaken the historical limits of standing.” This is an issue justices will need to deal with. Vladeck also suggests that they could decide that this is a political issue to go to the ballot box.