The Supreme Court will decide a legal challenge to the Biden administration’s student loan forgiveness program, which effectively leaves the effort blocked nationwide for at least another two months.
The Biden administration had requested an immediate reversal of a ruling from the U.S. Court of Appeals for the 8th Circuit, which paused the program while six Republican-led states challenge it in court.
The justices declined that request in a brief order Thursday and instead agreed to set the case for oral argument in February on the issues in the case.
The case arrived at the Supreme Court through an emergency application that defended the power of Secretary of Education Miguel Cardona to establish the program.
Biden announced the program over the summer, using a 2003 federal law that allows Cardona to cancel student loan debt for borrowers who face hardship because of national emergencies.
A slew of lawsuits challenged the program, intended to forgive up to $20,000 in student loan debt for millions of borrowers. Judges rejected most of them, including the district court judge who first heard the case now before the Supreme Court, because they found the challengers did not have the legal right to challenge the program.
In asking the justices to allow the program to go forward, the Biden administration argued a quick decision would “avoid prolonging this uncertainty for the millions of affected borrowers.”
Now, those borrowers will have to wait for months, possibly until the end of the Supreme Court’s term in June. As many as 26 million people have applied for the forgiveness program, according to the administration.
In the 8th Circuit, a three-judge panel ruled the state attorneys general have the ability to bring the challenge in court and gave a temporary stay while the case from Missouri, Arkansas, Nebraska, Iowa, Kansas and South Carolina played out.
The panel decision hinged on the potential impact the forgiveness could have on Missouri’s state-created loan servicer to justify allowing the case.
A federal district judge had originally thrown out the challenge from the states in October, finding they could not show they were harmed by the policy.
Conservative challengers to the program have argued it subsumed Congress’ power over appropriations to discharge more than $400 billion in loans owed to the government.
In a brief asking to keep the program paused, the six states said it was “implausible” that Congress meant for a loan forgiveness law to “completely bypass notice-and-comment rulemaking for one of the agency’s most costly and consequential actions ever.”
Originally, when the administration announced the forgiveness program, it also intended to end a coronavirus pandemic-related pause on student loan repayment by the end of the year.
But the administration has since extended that pause because of the court challenges through as late as next June. Cardona said at the time that opponents had gamed the courts to block the program.
“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it’s just plain wrong,” a statement from Cardona said.
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