Biden’s Student Loan Forgiveness Will Likely Be Deemed Illegal — What To Expect Now

Biden Rail Strike, Washington, United States - 02 Dec 2022
Manuel Balce Ceneta / AP / Shutterstock.com

With the fate of President Joe Biden’s student loan forgiveness program in limbo, millions of borrowers are left wondering how to best proceed. And now, several experts say that the Supreme Court will likely deem the program illegal.

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On Dec. 1st, the Supreme Court said it would hear oral arguments concerning President Joe Biden’s student loan forgiveness program in February, a move the administration called “welcomed.” But meanwhile, the program is paused, leaving millions of borrowers waiting for a decision, as GOBankingRates previously reported.

“The court’s conservatives have been very aggressive in striking down the decisions of Congress and the president,” Gregory Caldeira, a political science professor at Ohio State University, told CNBC. “I would not be surprised if the court invalidated the executive order.”

This ruling could come in stark contrast to what many Americans are thinking, as 51% support the Biden administration’s student debt relief program, compared to 39% who oppose it, according to a recent The Economist/YouGov survey.

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Legal Troubles Hamper Biden’s Student Loan Forgiveness Plan

Legal hurdles started accumulating shortly after the administration announced the program on August 24.

The administration had turned to the Supreme Court on Nov. 18 to vacate the nationwide injunction put in place on Nov. 14 by a federal appeals court, one temporarily barring President Joe Biden’s student loan debt relief program.

“The injunction will remain in effect until further order of this court or the Supreme Court of the United States,” a three-judge panel of the U.S. Court of Appeals for the 8th Circuit indicated within the Nov. 14 ruling, as GOBankingRates detailed.

The Supreme Court order comes on the heels of another blow to the program, as a federal court declined to reverse a ruling blocking President Joe Biden’s student debt relief program on Nov. 30.

“Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders,” a notice on Studentaid.gov now reads.

Biden Admin Extends Student Loan Payment Pause

In turn, the administration announced on Nov. 22 that the student loan pause — which was set to end Dec. 31, 2022 — will be extended to the end of June 2023, while the administration awaits the Supreme Court’s review of its student debt relief program.

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The administration remains optimistic that it will prevail, however, saying on Dec. 1: “We welcome the Supreme Court’s decision to hear the case on our student debt relief plan for middle and working class borrowers this February,” press secretary Karine Jean-Pierre said in a statement posted on the White House website.

“This program is necessary to help over 40 million eligible Americans struggling under the burden of student loan debt recover from the pandemic and move forward with their lives. The program is also legal, supported by careful analysis from administration lawyers. President Biden will keep fighting against efforts to rob middle class families of the relief they need and deserve. As we previously announced, student loan payments will remain paused while the Supreme Court resolves the case.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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