President Biden's student loan forgiveness program — which forgives up to $10,000 in federal student loans for borrowers earning under $125,000 a year, and up to $20,000 for Pell Grant recipients — was just argued before the Supreme Court, after a bevy of lawsuits kept it on ice for months. Here's everything you need to know about the program and where things stand:
What happened at the Supreme Court?
In canceling student debt, Biden is relying on authority pulled from the 9/11-era HEROES Act, which gives the education secretary the power to relieve student loan requirements during periods of wartime or national emergency (the national emergency in this instance being COVID-19). But because the president used an executive order and circumvented Congress to enact his program, lawsuits have followed.
On Feb. 28, the Supreme Court heard oral arguments in two cases: Biden v. Nebraska, a suit filed on behalf of six GOP-led states that believe Biden does not have the authority to cancel student debt, and Department of Education v. Brown, in which two borrowers ineligible for maximum forgiveness claim they were not afforded a period "to formally register their disapproval" with the program, thereby rendering it illegal, The Intelligencer summarizes.
During proceedings, the court's conservative majority appeared "deeply skeptical" of the plan, particularly as it relates to Biden's authority to implement such sweeping (and expensive) executive action, writes The New York Times. Most "casual observers" would likely believe that "if you're going to give up that much amount of money, if you're going to affect the obligations of that many Americans on a subject that's of great controversy, they would think that's something for Congress to act on," remarked Chief Justice John Roberts. The court's three liberals, however, suggested Congress had already acted on the matter by passing the 2003 law from which the administration believes it's pulling authority. "We deal with congressional statutes every day that are really confusing," added Justice Elena Kagan. "This one is not."
In the off-chance the White House does manage to eke out a win here, it will probably pertain to the issue of the plaintiffs' standing. Solicitor General Elizabeth Prelogar is also said to have "knocked it out of the park" when arguing the administration's case. Still, that may not change the skepticism displayed by the court's conservative justices, who are likely more inclined to kill the program than to let it stand.
When will payments restart?
Given the court challenges, the administration has once again extended the loan repayment pause, which was most recently set to lapse on Dec. 31, 2022. If the justices decide before the end of June (when the Supreme Court's term usually ends) to unblock the program, borrowers will have 60 days from that point until their payments resume. If not, payments will restart 60 days after June 30, 2023.
The repayment pause was first enacted by former President Donald Trump in March 2020.
Who is eligible for forgiveness?
Only borrowers making under $125,000 a year (and married couples or heads of households making less than $250,000 a year) are eligible for the maximum of $20,000 in federal loan forgiveness. Those "seeking debt relief can provide either their 2020 or 2021 incomes" when applying, CBS News writes; 2022 income will not apply, notes The New York Times. Further, only federal student loans, including PLUS loans, are eligible; neither private loans nor Federal Family Education Loans will qualify, the Times adds. Graduate loans qualify as well, though they are not eligible for the extra $10,000 offered to Pell Grant recipients, per The Washington Post.
Current students can still qualify so long as their loans were disbursed by June 30, 2022.
How do I apply?
Most borrowers will have to apply for forgiveness through the Department of Education at StudentAid.gov. But the application is currently locked as legal challenges play out.
In the meantime, "borrowers should sit tight," Kantrowitz told NextAdvisor. "It can take time for the cases to work their way through the courts." But you can get ahead by "staying informed," NextAdvisor continues. Sign up for updates from the Department of Education, or maybe research other possible debt relief programs, like Public Service Loan Forgiveness or Teacher Loan Forgiveness. The administration also initially said borrowers would have until Dec. 31, 2023, to apply, so those who have yet to submit an application might still have time once (and if) litigation concludes.
Why is debt relief such a contentious issue?
Those in favor of widespread loan forgiveness claim that student debt delays and prevents borrowers from starting their lives — whether that means buying a house or having children — and weighs more heavily on Black and Hispanic families, NerdWallet reports. Proponents also typically emphasize that "not all borrowers have degrees that boost earnings."
Those who argue against student debt cancellation often claim it is unfair to those who have already paid off their loans or didn't go to college. They posit that forgiveness tends to disproportionately benefit wealthy borrowers (those with the most debt often have a graduate degree or higher, leading to higher earnings) and fails to solve the underlying student debt crisis, per NerdWallet. Critics also worry about inflation, which they fear might worsen under Biden's policy. According to the Congressional Budget Office, the relief plan will cost roughly $400 billion over the next 30 years.
Has the administration done anything else in the way of debt relief?
As another piece of its broader relief plan, the Education Department also introduced what it has described as a "student loan safety net" intended to keep borrowers from drowning in debt. The proposal would revise the income-driven repayment plan known as REPAYE — under which borrowers' monthly payments are fixed to their income and household size, and loans are forgiven after a set number of years — in at least three big ways: (1) it would adjust down from 10 percent to 5 percent the amount of discretionary income borrowers must pay on their balance each month; (2) borrowers with original loans under $12,000 would be required to make monthly payments for just 10 years before cancellation, instead of the usual 20; and (3) unpaid interest would not accrue so long as borrowers meet their monthly payment.
Update March 6, 2023: This article has been updated throughout.
