The Supreme Court on Thursday allowed a nationwide injunction blocking President Biden’s signature student loan forgiveness program to remain in place, while signalling that it will consider legal arguments regarding the program in a few months.
Here’s what borrowers should know.
Biden’s Student Loan Forgiveness Plan Has Been Blocked
Biden’s sweeping student loan cancellation initiative would have provided $10,000 or more in one-time debt forgiveness for qualifying borrowers. But last month, the 8th Circuit Court of Appeals, in a unanimous ruling, granted a preliminary injunction blocking the program. In that case, a coalition of Republican-led states are arguing that the one-time debt cancellation program deprives the states, via state-affiliated FFELP agencies, of revenue. The Biden administration appealed to the Supreme Court.
In a separate case, yesterday the 5th Circuit Court of Appeals declined to reinstate the program after a federal district court judge in Texas struck it down as unconstitutional. In that case, a conservative-leaning nonprofit group had argued that the Biden administration did not follow proper regulatory procedures under federal law when it established the loan forgiveness program. The Biden administration will likely be appealing the 5th Circuit’s decision to the Supreme Court, as well.
While the court-imposed blocks remain in place, the Education Department has not been able to accept new applications for the one-time student loan forgiveness program.
Supreme Court Leaves Student Loan Forgiveness Blocked Pending Ruling
In a brief order on Thursday, the Supreme Court indicated that it would keep the 8th Circuit’s preliminary injunction in place while it considers legal arguments regarding Biden’s loan forgiveness plan. Oral arguments are set for February, and a ruling could come any time after that. In the meantime, the student loan forgiveness program will remain suspended.
In response to the ongoing legal maneuvers, the Biden administration last month extended the ongoing student loan pause to as late as June 30, 2023. However, the end-date of the student loan pause is a bit ambiguous, as the administration indicated that,“Payments will resume 60 days after the Department is permitted to implement the program or the litigation is resolved.” If the Supreme Court rules before the summer, and there is no further pending litigation regarding Biden’s loan forgiveness plan, it’s possible that payments could restart sooner than June.