After the Supreme Court heard oral arguments regarding student loan forgiveness, borrowers may wonder what will happen next. According to experts, even though oral arguments only last one day, the justices’ decisions could take months. Mark Kantrowitz, an expert in higher education, discovered that half of the previous Supreme Court term’s decisions were handed down in June.
It could be an agonising wait for many borrowers: Before the U.S. Department of Education was forced to shut down its online application due to legal issues, the Biden administration’s relief programme received over 26 million applications. The decision of the nine justices will determine whether these debtors will have up to $20,000 of their debt forgiven.
“For many people, this is life and death,” said Thomas Gokey, co-founder of the Debt Collective, a nationwide association of borrowers. What’s at risk is having to decide between paying off student loans and being able to pay rent, purchase food, and cover medical expenses”.
Experts Say The Ruling Could Go Either Way
At least six lawsuits have been filed against President Joe Biden’s plan since it was unveiled in August. The Job Creators Network Foundation, a conservative advocacy organisation, and six states led by the Republican Party — Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina — have filed legal challenges.
The nine justices considered both cases on Tuesday. Experts in the law predicted that Biden’s strategy would have trouble convincing the justices to agree prior to the oral arguments. After praising the work of Solicitor General Elizabeth Prelogar, the attorney who represented the Biden administration before the Supreme Court, some of them changed their minds. According to Kantrowitz, the Biden administration now has a greater likelihood of success than failure in the lawsuits. According to Steven Schwinn, a law professor at the University of Illinois at Chicago, Prelogar “hit a home run.”
“I believe she could have persuaded at least two judges,” he continued. Plaintiffs asserted that the president could forgive $400 billion in student loan debt without approval from Congress.
The government attorney who opposed the policy responded that the Education Department could modify the federal student loan programme to include debt forgiveness in times of national emergency. Recently, a senior Education Department official warned that the public health crisis has significantly harmed the finances of student loan borrowers.
A plan to cancel the department’s debt is required to prevent an unprecedented increase in delinquencies and defaults. The justices occasionally appeared sceptical that such emergency powers applied to the administration’s plan to forgive all student loans. However, they occasionally appeared to question whether the plaintiffs had sufficiently demonstrated that the plan would cause them harm, which is typically a requirement for having standing to sue.
Payment Pause On Federal Student Loans Is Still Ongoing
Since the coronavirus epidemic first impacted the U.S. in March 2020 and severely damaged the economy, federal student loan payments have been suspended. According to Kantrowitz, the time it takes the Supreme Court justices to rule will determine when the bills resume.
The accounts would resume 60 days after the case over the Education Department’s student loan forgiveness plan is resolved, the department stated in November. Payments will continue at the end of August if the administration’s intention to cancel student debt is still subject to legal challenges by the end of June or if it is not permitted”.
If the court approves student loan forgiveness, many borrowers will never have to resume payments. According to a White House estimate, under the president’s proposal, approximately 20 million Americans could have their debts completely forgiven. Kantrowitz predicted that 60 days will suffice to forgive student loan debt if the president’s plan is successful. They need only send this information to the loan servicers, as they have already approved loan forgiveness for 16 million borrowers. He continued, “The service providers should implement it within one to two weeks.”
A Ruling Against Student Loan Forgiveness Isn’t The End
According to experts, if the justices reject the student loan forgiveness scheme, the Biden administration may search for alternative relief methods. The administration may also attempt to extend the payment suspension while it decides what to do next.