Will Biden’s Student Loan GIVEAWAY Survive SCOTUS?

The U.S. Supreme Court is set to review a controversial student loan forgiveness program, potentially impacting millions of American borrowers and billions in debt relief.

At a Glance

  • Supreme Court to review student loan forgiveness policy that allowed $17 billion in loan forgiveness
  • Biden administration has approved around $180 billion in student loan debt forgiveness
  • Fifth Circuit Court ruled Department of Education exceeded its authority
  • Case centers on the interpretation of the Higher Education Act of 1965
  • Decision could impact future of Biden’s student debt policies

Supreme Court Takes on Controversial Student Loan Policy

The U.S. Supreme Court is preparing to deliberate on a contentious student loan forgiveness program that has already allowed the Biden administration to forgive $17 billion in loans. This review comes after the Fifth Circuit Court determined that the Department of Education had overstepped its authority in implementing the program.

The program in question was designed to simplify the process for students to dispute loan repayments, particularly for those who have been misled by educational institutions. The controversy stems from the interpretation of the Higher Education Act of 1965, which supports borrower protections under circumstances of institutional fraud.

Legal Challenges and Nationwide Impact

The borrower defense to repayment rule, updated in 2022, has faced significant legal challenges. A lawsuit from the Career Colleges and Schools of Texas (CCST) led to the program being blocked by a lower court. The 5th U.S. Circuit Court of Appeals sided with CCST, effectively restricting the Department of Education’s ability to grant relief to student borrowers.

“It simply means that the Supreme Court will hear arguments as to the scope of the Department of Education’s authority related to [the borrower defense rule]. It remains to be seen how the incoming Trump administration will argue the government’s side of the case, but we strongly believe the facts of the case will show the Department’s onerous [borrower defense rule] went well beyond the agency’s authority,” Jason Altmire of Career Education Colleges and Universities said.

The Supreme Court’s decision to review this case has significant implications for student borrowers across the nation. At stake is the ability of borrowers to file for borrower defense before defaulting on their loans, a key aspect of the Department of Education’s efforts to streamline the relief process.

Political Implications and Future Uncertainties

The Supreme Court’s review of this policy comes at a politically charged time. President-elect Donald Trump, who has historically been against student loan forgiveness, is preparing to take office. This transition of power adds another layer of complexity to the case, as Trump’s previous administration sought to increase monthly payments and merge income-driven repayment plans.

“Borrowers shouldn’t expect much relief under Trump. He has never been a proponent of widespread debt forgiveness, and history suggests he sees personal responsibility as the foundation of financial obligations. Trump University’s $25 million settlement serves as a reminder that he doesn’t part with money easily, and many believe he carries a vendetta against anything that resembles a government bailout for individuals,” Kevin Thompson of 9i Capital Group said.

The Supreme Court’s decision could have far-reaching consequences for the future of Biden’s student debt policies, which have been a cornerstone of his presidency. To date, the Biden administration has approved approximately $180 billion in student loan debt forgiveness, affecting nearly 5 million Americans.

Broader Implications for Student Borrowers

The case before the Supreme Court has broader implications for student borrowers who may need to default on loans to seek relief. This potential outcome has raised concerns among advocacy groups and legal experts.

The Fifth Circuit’s interpretation of the statute is contrary to that taken by every administration since the statute was enacted—including the last Trump administration. It would also have the perverse negative consequences of forcing student borrowers to default on their loans to find out if they were entitled to the relief created by Congress,” Attorney Adam Pulver of Public Citizen said.