Yesterday, the Supreme Court announced that it would decide on the legality of President Joe Biden’s proposed student loan forgiveness plan. The plan, once on the fast track, has now ground to a halt under the weight of multiple legal challenges. The case that the Supreme Court will hear comes from six Republican-led states and alleges that the forgiveness will affect their state revenues. 

Meanwhile, a judge in the Northern District of Texas already struck down the president’s forgiveness program. In that case, the judge ruled that the program was invalid because the Department of Education:

1. Invented a major new authority that Congress did not intend,
2. Used COVID to invoke emergency authority to forgive loans while the president was simultaneously saying that “the pandemic is over,” and
3. Failed to solicit public input on the loan forgiveness plan as required by law when a federal agency is acting on major policy without Congress.

Just this week, the Court of Appeals for the Fifth Circuit declined to immediately reinstate the forgiveness. Of potentially greater importance, both the Texas court and the Court of Appeals for the Eighth Circuit indicated that their respective plaintiffs at least probably had standing to bring a case. The issue of standing has loomed large despite widespread questions about Biden’s authority to forgive loans. It may yet prevent the Supreme Court from halting the loan forgiveness, even though conservative justices have shown a desire to curb executive branch overreach.

Meanwhile, the Biden administration’s other efforts towards total loan forgiveness continue unabated.  Separate from the much-publicized forgiveness, the administration is stretching existing departmental powers to forgive relatively smaller buckets of loans.

One prominent example is allowing borrowers in Income Driven Repayment (IDR) plans to repay only 5 percent of discretionary income rather than 10 percent. This policy alone may turn out to be more expensive than the current forgiveness proposal.

As another example, a number of narrowly defined forgiveness options created by Congress are being twisted far beyond the original intent in order to forgive as many loans as possible. Biden has made it radically easier to forgive loans for borrowers working in “public service,” those who claim they were defrauded by their college or university, those who are disabled, those who attended colleges that were forced to close, and more.

All the while, the government is spending perhaps hundreds of billions of dollars more on a never-ending “pause” that was supposed to be a temporary pandemic-related measure. When loans are finally turned back on, many students will be able to obtain forgiveness more easily by counting partial payments or the payments they didn’t make during the pause.

The one thing that both sides seem able to agree on is that the Supreme Court should decide on the issue as soon as possible. For the Biden administration, a signature issue is at risk and their repeated broken promises on the pause (and whether they have the authority to forgive loans in the first place) make for uncomfortable politics. For their opponents, each passing day means more uncertainty and more money redistributed from those who voluntarily took out loans to get college credentials to those who paid off their loans or did not go to college at all. Each side will now get what it wants: a showdown at the nation’s highest court sometime early next year.

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