Learn about the Supreme Court’s oral arguments regarding President Joe Biden’s plan for student loan forgiveness and how the ruling could hinge on legal standing and the interpretation of the HEROES Act. Find out why financial decisions should not be based on the outcome of the case and what steps borrowers should take to ensure they are in the best financial position possible.
Questions Answered in this Article
- What could determine the Supreme Court ruling on Biden’s student loan forgiveness plan? Answer: The Supreme Court’s ruling could hinge on the issue of legal standing, which pertains to a party’s right to file a lawsuit.
- What was discussed during the oral arguments in Biden v. Nebraska? Answer: Much of the oral arguments centered around whether Missouri, one of the six states suing, had the right to bring a claim on behalf of Mohela, an independent state-created student loan servicer.
- What could determine the legality of Biden’s plan? Answer: The legality of Biden’s plan could depend on the interpretation of the HEROES Act of 2003 and the meaning of the words “waive” and “modify” in the act.
- Who received praise for their performance during the oral arguments on behalf of the White House? Answer: U.S. Solicitor General Elizabeth Prelogar’s performance arguing the two cases on behalf of the White House received praise from several experts.
- Should borrowers make financial decisions based on the outcome of the Supreme Court arguments regarding Biden’s student debt cancellation plan? Answer: No, borrowers should not make financial decisions based on the outcome of the Supreme Court arguments. Instead, they should plan and take action to ensure they have the best financial position possible.
What Happened During the Supreme Court Arguments on Biden’s Student Debt Forgiveness Plan?
During the Supreme Court’s oral arguments on Tuesday regarding President Joe Biden’s plan for student loan forgiveness, the courtroom was packed with activists, borrowers, and experts, while protestors gathered outside. Betsy Mayotte, founder and president of The Institute of Student Loan Advisors said it was like the Super Bowl for student loan enthusiasts. The arguments lasted almost two hours longer than scheduled, but the game’s outcome won’t be known for a while, as a decision is expected by late June. The nine justices will assess two critical lawsuits and determine whether about 40 million Americans will have up to $20,000 of federal student debt erased.
Legal Standing: The Key Issue in the Supreme Court’s Ruling on Biden’s Student Debt Forgiveness Plan
The Supreme Court’s ruling could hinge on the issue of legal standing, which pertains to a party’s right to file a lawsuit. In the case of Biden v. Nebraska, much of the oral arguments centered around whether Missouri, one of the six states suing, had the right to bring a claim on behalf of Mohela, an independent state-created student loan servicer. Justice Elena Kagan, a liberal justice, noted that it’s not typical to allow someone to claim that another person suffered harm, even if the damage is significant.
In Department of Education v. Brown, the justices questioned whether the two plaintiffs, who claimed they weren’t eligible for part or all of the relief, were harmed by not having the chance to participate in a notice-and-comment period for the program. According to Dominique Baker, an associate professor of education policy at Southern Methodist University, the federal government argues that the scope is too broad or too narrow, depending on the case. Ultimately, determining what’s too wide or too little is subjective, and the court will rely on the nine justices’ definitions of a personal issue.
If at least one plaintiff has standing, the court can begin evaluating the legality of Biden’s plan.
Interpreting the HEROES Act: How the Supreme Court is Dissecting ‘Waive or Modify’ for Student Debt Forgiveness
The legality of Biden’s plan could depend on the interpretation of the HEROES Act of 2003, a law that was passed after the 9/11 attacks. Observers noted that the justices asked many questions about “waive” and “modify” in the act. The law states, “The Secretary of Education may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs,” which is applicable “as the Secretary deems necessary in connection with a war or other military operation or national military emergency.”
The White House argues that this provision allows for debt cancellation due to the pandemic, but some justices appeared doubtful. “When we start thinking about the merits of the case, quite frankly, this is going to hinge a lot on how the justices view a waiver and a modification,” noted Dominique Baker.
During a seminar held on Wednesday, Sheng Li, litigation counsel at the conservative think tank New Civil Liberties Alliance, claimed that “the government has interpreted the word ‘modify’ to mean rewrite.” He added that when Congress drafts statutes to cancel the debt, they are very explicit about the conditions for debt cancellation.
U.S. Solicitor General’s Performance Praised During Supreme Court Arguments on Biden’s Student Debt Forgiveness Plan
U.S. Solicitor General Elizabeth Prelogar’s performance arguing the two cases on behalf of the White House received praise from several experts. Prelogar, who grew up in Idaho and had a master’s degree in creative writing and a Harvard law degree, worked as a Justice Department attorney for many years before being appointed the fourth-ranking Justice Department member by President Biden in 2021.
“I think the solicitor general did an excellent job standing up for borrowers, highlighting the impact of the pandemic on student loan borrowers, and showing how if cancellation doesn’t happen, there’s going to be a wave of defaults and delinquencies,” said Persis Yu, deputy executive director and managing counsel of the borrower advocacy group Student Borrower Protection Center.
“Prelogar knocked it out of the park,” said Steven Schwinn, a University of Illinois Chicago law professor. “I think she could have influenced or even changed the thinking of two justices, maybe more.”
Financial Decisions and Student Debt Forgiveness: What Borrowers Should Do While Waiting for the Supreme Court’s Decision
Financial decisions should not be made based on the outcome of the Supreme Court arguments regarding Biden’s student debt cancellation plan, despite the frustration felt by borrowers after the months-long legal battle. “It’s been this game of cat-and-mouse for so long, so why am I even getting my hopes up at this point?” says Kristen Ahlenius, director of education at workplace financial wellness company Your Money Line, who frequently works with public schoolteachers and other borrowers with higher-than-average student debt burdens.
Instead, borrowers should plan and take action to ensure they have the best financial position possible. “Borrowers need to take action to make sure they’re in the best position possible,” advises Persis Yu, deputy executive director and managing counsel of the borrower advocacy group Student Borrower Protection Center. Student debt cancellation is not guaranteed, and a Supreme Court ruling is not expected until late June. Therefore, it is essential to contact your loan servicer, understand your monthly payment requirements, and start putting aside money if possible. “I’m seeing borrowers forming their own opinions based on what they heard or read. I see some say ‘slam dunk,’ and others saying this will get struck down,” says Betsy Mayotte, president of The Institute of Student Loan Advisors. “Some borrowers act based on what they heard today, but that’s a mistake. I don’t think we know until we know.”
Summary
- On Tuesday, the Supreme Court held oral arguments on President Joe Biden’s student loan forgiveness plan, which could erase up to $20,000 of federal student debt for about 40 million Americans.
- The Supreme Court ruling could depend on the issue of legal standing, which pertains to a party’s right to file a lawsuit.
- The justices also questioned the meaning of “waive” and “modify” in the HEROES Act of 2003, a law passed after the 9/11 attacks that the White House argues allows for debt cancellation due to the pandemic.
- U.S. Solicitor General Elizabeth Prelogar received praise for her performance arguing the cases on behalf of the White House.
- Borrowers should not make financial decisions based on the outcome of the Supreme Court arguments and instead plan and take action to ensure they have the best financial position possible.
