Loans and grants

Supreme Court ruling nears. What to know

And, as the New York Times reported, “justices across the ideological spectrum seemed unpersuaded” by the standing arguments of the two individual borrowers. 

But the conservative majority was also deeply skeptical of the administration’s claim of executive authority to wipe out billions of dollars in debt without congressional approval. 

The Biden administration must keep the three liberal justices and pick up two conservative votes to save the forgiveness program. 

What are the possible ways the court could rule? 

If the court finds that one or both of the groups have standing, Litman said it is likely that the majority of justices will invalidate the student loan forgiveness program. 

“I did not hear really any sympathy from any of the Republican-appointed justices on the merits of the program,” Litman said. 

If the court finds that neither of the parties have standing, the court cannot say anything about the lawfulness of the program, Litman said. It would, in effect, have to reject the legal challenges without getting to the substantive question of whether the Biden administration exceeded its executive authority in forgiving the debt. 

Litman noted that public approval ratings of the Court declined at the end of the Court’s last term, where the court notably reversed the abortion precedent of Roe v. Wade, with many perceiving the court’s rulings weren’t “wholly based in the law and also were wildly out of step with most Americans’ views.” 

She said these student debt relief cases could pose another instance where the Court might choose to be “picking a fight with the Biden administration” and going against the views of Americans. 

A March poll conducted for Newsweek found that 62 percent of Americans support the Biden loan forgiveness plan. 

What’s next for borrowers if justices rule against the plan? 

In short, student loan borrowers would not see their loans forgiven, at least under the program announced last August. 

But separate from how the court rules, student loan borrowers will soon see the end of a three-year pause in student loan payments. 

Since 2020, student loan borrowers have not been required to make payments on their loans and their loans have not been accruing interest. The Trump administration first paused the payment requirement in March 2020, at the start of the pandemic, and the Biden administration has extended the program several times.

Biden and Congress negotiated an end date for the student loan pause as part of the recent U.S. debt ceiling deal.

Loans will begin accruing interest beginning on September 1 and payments will be due starting October, the U.S. Department of Education states on its student loan website

What’s the economic impact if the Biden loan forgiveness is upheld? 

The Biden Administration estimates that among borrowers no longer in school, almost 90 percent of relief money will go toward those earning less than $75,000 a year, providing a needed economic boost.

But it won’t come cheap. The nonpartisan Congressional Budget Office previously estimated the loan forgiveness program would cost the federal government $400 billion

Scott Imberman, an economics and education policy professor at Michigan State University, told Bridge that the level of economic impact depends in part on how borrowers spent, or didn’t spend, money while awaiting the ruling.

He said it’s unclear how many people took a “wait and see attitude,” by applying for loan forgiveness but holding off on making any big purchases with money they otherwise would have put toward their loan.

Are there other ways the Biden administration has acted to provide loan relief? 


John Patrick Hunt, law professor at the University of California, Davis, noted a variety of ways in which the Biden administration has acted, including:  

Student loan payment pause and no interest: The Trump Administration first paused requirements for borrowers to make payments in March 2020. The Biden Administration extended the pause several times.

Changes to the income-driven repayment programs: The Biden Administration proposed a rule in January that, if finalized, would reduce the amount of money some borrowers with income-driven repayment plans have to pay back before their loans are forgiven. 

Revising the Public Service Loan Forgiveness program: Under this program, borrowers who work for a qualifying government or nonprofit organization, can have the remainder of their loans forgiven after making ten years of payment. 

The administration announced a waiver process in October 2021 that ran through October 2022 that allowed borrowers to “receive credit for past periods of repayment that would otherwise not qualify for PSLF,” according to the Student Aid website

The Department of Education announced in May it had approved $42 billion in Public Student Loan Forgiveness for more than 615,000 borrowers since October 2021.

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