U.S. Supreme Court Will Take Up Biden’s Debt-Cancellation Plan

The U.S. Supreme Court has agreed to review the legality of President Biden’s loan-forgiveness plan, which is currently blocked by a lower court’s injunction.

The justices will hear oral arguments in February, according to a court order on Thursday. Biden’s plan would cancel $10,000 in student-loan debt for individual borrowers who earn less than $125,000 a year and for households that make less than $250,000. Pell Grant recipients would get up to $20,000 shaved off their debt. The Congressional Budget Office estimates the program would cost $400 billion over the next three decades.

Nearly 26 million borrowers have applied for relief from the program since its announcement, in August, and 16 million applications have been approved by the U.S. Education Department. But court rulings have prevented any debt from being canceled, frustrating borrowers and leaving college financial-aid offices inundated with questions. The program has stopped accepting applications while the court battles play out.

Last month a federal judge in Texas ruled the program unlawful, saying it infringed on Congress’s power. Days later, in a separate lawsuit against the program, the U.S. Court of Appeals for the Eighth Circuit, in St. Louis, also ruled against the Biden administration, extending a hold the court had placed on the program in October at the behest of six Republican-led states.

In response, the U.S. Justice Department petitioned the Supreme Court to lift the Eighth Circuit’s injunction. The injunction remains in effect pending oral arguments in the case, Biden v. Nebraska, No. 22-506. The Supreme Court typically issues its highest-profile rulings in May or June each year.

The court said it would be considering whether the six Republican-led states have standing to bring the case and whether the plan exceeds the secretary of education’s authority.

In a written statement, Karine Jean-Pierre, the White House press secretary, said the Biden administration welcomed the Supreme Court’s decision to review the loan-forgiveness plan.

“This program is necessary to help over 40 million eligible Americans struggling under the burden of student-loan debt recover from the pandemic and move forward with their lives,” Jean-Pierre said.

Last week, in response to the setbacks in court, the Biden administration again extended the pause on student-loan payments, which has been in effect since March 2020. The pause will last well into next year — until June 2023 or until lawsuits against the debt-relief plan have been resolved.

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