The SCOTUS Delivers Ruling on Biden’s Student Debt

The Supreme Court has decided not to reject President Biden’s plan to reduce the cost of college tuition, which is a huge win for the administration. On Thursday, the Supreme Court declared that it would not stop the $6 billion in compensation for former students, many of whom attended for-profit institutions and who now say they were misled about their career prospects and academic performance.

The judges denied a petition from three universities that had contested a settlement between the U.S. Department of Education and borrowers that had tied the universities to allegations of serious wrongdoing.

After a federal judge in California approved the settlement last November, three of the institutions named in it the for-profit Lincoln Educational Services Corp and American National University Inc, and the non-profit Everglades College Inc challenged it.

It is estimated that 3,500 students who attended one of the three schools are eligible for an automatic loan discharge under the settlement. Different from the issue before the court, in which many expect the court will strike down Biden’s huge plan to eliminate around $430 million in debt from around 40 million borrowers.

The Supreme Court of the United States may hear a third case involving the cancellation of student loans. President Joe Biden’s hallmark one-time debt relief proposal is currently being challenged in two separate cases before the Supreme Court.

Up to 40 million borrowers might benefit from this enormous effort, which would cancel federal student loans of $10,000 or more. In February, the Court held a landmark hearing at which the justices grilled lawyers on both sides of the argument; a decision is likely in June.

As of right now, no debtors have qualified for loan forgiveness. During oral arguments in early March, Supreme Court Justice Clarence Thomas grilled the Biden administration on the president’s student loan giveaway, suggesting that he does not think the White House has the constitutional right to do so.

Two challenges challenging Biden’s plan to cancel student loans were heard by the Supreme Court. On behalf of the administration, US Solicitor General Elizabeth Prelogar argued that it’s undisputed that defaults and delinquencies will surge above pre-pandemic levels if the suspension on payments is allowed to end without some form of plan in place.

She added that the states do not have the legal jurisdiction to ask the court to rule against millions of Americans receiving this life-saving relief. Prelogar continued by also saying that the states contend that the act does not authorize the secretary to ever forgive loan principal.

However, the secretary’s interpretation of this passage is the optimal reading, not merely a feasible one. To help borrowers in dire situations, Congress gave the secretary broad authority to alter or suspend provisions of any chapter.

Thomas wondered if student loan cancellation was possible through a waiver or adjustment. According to The Post Millennial, in response, Prelogar brought up the Heroes Act, which was passed after 9/11 and gives the education secretary certain powers that could be used in the event of a national emergency.

However, skeptics like Thomas argue that the HEROES Act was only meant to address crises following the terrorist attacks of September 11, 2001, and not a pandemic twenty years later. Thomas then pressed Prelogar for an explanation of how debt forgiveness for students differs from the funds for which Congress is accountable.

He said that there is talk about a debt cancellation, which is really what we’re talking about, and that as a reduction of $400 billion in debt, this is really a grant of $400 billion that goes against Congress’s power to spend money.

Prelogar responded that because it does not require any money to be pulled from the Treasury, he does not believe it strictly poses an appropriations issue. Meanwhile, Biden mentioned last week that he wasn’t confident the loan giveaway would pass constitutional muster within the restrictions specified by a majority of justices after hearing the arguments portion of the case.

A day after the court’s conservative majority seemed skeptical of Biden’s authority to enact debt relief, President Joe Biden told reporters on Wednesday that he is not confident that the His order to forgive up to $20,000 in government student loan debt for tens of millions of borrowers will be upheld by the Supreme Court.

Biden was quoted when speaking to reporters outside the White House as saying that he is confident that we are on the right side of the law, but he also mentioned that he is not confident about the outcome of the decision yet,