Biden administration seeks Supreme Court relief after student debt plan blocked

The Biden administration on Friday urged the Supreme Court to clear one of the legal obstacles blocking its student debt relief program, as part of the administration’s broader legal effort to have the policy reinstated.

The administration is currently fending off two separate rulings issued over the last two weeks that have effectively halted President Biden’s student loan forgiveness plan, which would give federal borrowers making less than $125,000 a year up to $10,000 debt relief.  

In its Friday filing, the Department of Justice (DOJ), on behalf of the administration, urged the justices to lift a ruling issued Monday by the St. Louis-based U.S. Court of Appeals for the 8th Circuit that halted the loan relief program, saying its current legal status has left “vulnerable borrowers in untenable limbo.” 

“The [8th Circuit’s] injunction thus frustrates the government’s ability to respond to the harmful economic consequences of a devastating pandemic with the policies it has determined are necessary,” U.S. Solicitor General Elizabeth Prelogar told the justices.

Biden’s policy, which the Congressional Budget Office estimates will cost about $400 billion over 30 years, has drawn numerous legal challenges. Its aim is to forgive up to $10,000 in federal student loan debt for those making under $125,000 annually and up to $20,000 for recipients of Pell Grants, which assist students from lower-income families.

The administration’s move on Friday comes after a unanimous three-judge panel on the 8th Circuit halted Biden’s massive debt relief plan, which had already been blocked nationwide by a separate court ruling.

The panel, which comprised two Trump-appointed judges and one appointee of former President George W. Bush, said its order would remain in effect until further notice by the 8th Circuit or the Supreme Court.

The ruling was a win for six conservative-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — that challenged the program on the grounds that they were harmed by a freeze on the collection of student loan payments and interest. The court’s six-page ruling singled out the impact on a large, Missouri-based holder of student loans called the Higher Education Loan Authority of the State of Missouri. 

“The equities strongly favor an injunction considering the irreversible impact the Secretary’s debt forgiveness action would have as compared to the lack of harm an injunction would presently impose,” the panel wrote. “Among the considerations is the fact that collection of student loan payments as well as accrual of interest on student loans have both been suspended.”

The White House, for its part, maintains that its policy is authorized by a 2003 federal law known as the Higher Education Relief Opportunities for Students Act, which both the Trump and Biden administrations have drawn upon to alleviate student borrowers’ financial strain during the global pandemic.

In a related legal development last week, a Trump-appointed federal judge in Texas invalidated the program, saying the presidential action unlawfully encroached on Congress’s power. The Biden administration has asked the U.S. Court of Appeals for the 5th Circuit to halt that ruling while it mounts a formal appeal.

Several other similar challenges to Biden’s plan have so far proved unsuccessful. Among them were two cases that eventually sought emergency relief in the Supreme Court but were unilaterally rejected by Justice Amy Coney Barrett. 

The Supreme Court may be more inclined to intervene now that the U.S. government is the party seeking relief and as courts across the country reach different conclusions about the program’s lawfulness.

The DOJ, in its Friday filing, told the justices they could choose to construe the government’s request as a formal petition for appeal and place it on a procedural fast-track. 

The DOJ filing comes as student loan borrowers are anxiously awaiting for payments to restart at the beginning of 2023. 

Advocates have been pressuring the Biden administration to extend the pause on payments, which began at the beginning of the pandemic, while the debt relief program is going through the courts. 

Before the legal challenges, millions of borrowers applied for the debt relief through an application on the Department of Education’s website. Borrowers were told to apply before Tuesday in order to have a chance at their debt being forgiven before the payments began. 

Since then, the applications have been taken down, and borrowers could have to wait months to get a final decision on the legality of the program from the courts. 

The Washington Post previously reported talks were happening in the White House to extend the payment pause again due to the court challenges, despite Biden telling borrowers there would be no more extensions.

However, there has been no official word from the White House on the issue with only a month and a half left before payments resume.

—Updated at 12:56 p.m.