The validity of a measure that has been passed by US President Joe Biden and his administration that seeks to cancel or waive close to 400 billion dollars in student loans was contested in two cases before the US Supreme Court on February 28.

As the protesters gathered outside the Supreme Court in the rain and cold, calling for the top court to support Biden’s decision to cancel nearly 26 million people’s student loans, the arguments in the two separate cases, “Biden vs Nebraska” & “Department of Education vs Brown,” went on for three and a half hours before a nine-judge bench.

Asserting that this was “one of the most ambitious and expensive executive actions in the nation’s history, violating separation-of-powers principles,” carried out without congressional authority, a majority of the justices on the Supreme Court, including Chief Justice John Roberts, were “deeply sceptical” of Biden’s choice. The future of millions of people who are heavily indebted is unknown as a result of the present legal challenge to Biden’s action.

The “Debt Forgiveness” plan, which Biden unveiled on August 24, 2022, promised to forgive 10,000 dollars in student loan debt for those “income less than $125,000” or for households making less than $250,000 annually, according to the Associated Press. Also, Pell Grant recipients would receive an additional $10,000 in debt forgiveness because they often exhibit higher financial need. Federal Pell Awards are often given to undergraduate students without a bachelor’s, master’s, or professional degree who have exceptional financial needs.

Under this programme, all qualified college students whose loans were disbursed before to July 1, 2022, were eligible, making about 43 million borrowers eligible for a loan relaxation. 20 million of these “may have their debt completely wiped,” according to

According to the White House’s official statistics, 26 million people have already requested debt relief, and 16 million of those requests have been granted. The program’s cost is predicted by the Congressional Budget Office to be $400 billion over the ensuing three decades.

Due to the COVID-19 pandemic-related economic crisis, the Biden administration announced a debt forgiveness programme based on the Higher Education Relief Opportunities for Students Act of 2003, or the HEROES Act, which gives the secretary of education the authority to “waive or modify any statutory or regulatory provision” that will protect borrowers affected by “a war or other miltary operation.”

In “Biden versus Nebraska,” six Republican states—Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina—filed a lawsuit on September 29, 2022, seeking to halt the loan forgiveness scheme. In the case of “Department of Education vs. Brown,” two people, Myra Brown and Alexander Brown, filed a second challenge on October 10, 2022, arguing that they were not qualified to receive sufficient loan waivers under Biden’s plan.

A lower court rejected the initial argument made by the six Republican states, concluding that they could not challenge Biden’s programme because they had not suffered injury. Nevertheless, the US Court of Appeals for the 8th Circuit in St. Louis temporarily suspended the case while the appeal was being heard. The Missouri Higher Education Loan Authority (MOHELA) contended that losing the millions of dollars in fees that the administration will now be forgiving would financially hurt it. On December 1, 2022, the SCOTUS made the decision to step in and break the deadlock.

In the second instance, two students named Myra and Alexander claim that the Biden administration either failed to grant them the waiver or did so insufficiently. Alexander qualified for just 10,000 dollars instead of the full 20,000 dollars since he was not a Pell grant recipient, while Myra was not eligible for a loan relaxation because his debts were “commercially held.”

The trial judge sided with the students and determined that they had “standing to sue” since they had been denied “the opportunity to encourage the administration to expand the plan to provide greater debt relief,” according to the New York Times. The Supreme Court then opted to take it up along with the lawsuit brought by the six states after a federal appeals court upheld the lower court’s order.

No, Attorney General Elizabeth B said in Tuesday’s proceedings that the Trump administration had also used the 2003 HEROES Act to temporarily stop “loan repayment restrictions and suspend the accumulation of interest” after designating COVID-19 as a “national emergency” in 2020. When the Biden administration took office after that, it used the statute in a similar way.

By Bizemag Media

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