The Legality of Biden’s Student Loan Forgiveness Plan

President Joe Biden's student loan forgiveness plan may be legal under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, but that hasn't stopped the Supreme Court from pushing back on it. On Aug. 24, 2022, President Joe Biden announced a three-part student loan forgiveness plan to eliminate student loan debt, lower monthly payments, and make college more affordable. With more than 45 million student loan borrowers collectively owing $1.6 trillion, it’s easy to see why higher education has become a lifelong burden for so many people. It no doubt came as a relief to many of these borrowers when Biden's plan was announced. On the flip side, it likely has caused stress knowing that the student debt relief is blocked as of February 2023 and that the Supreme Court could determine that the plan is not constitutional.

What's In Biden’s Student Debt Relief Plan?

Biden’s plan will provide up to $10,000 in federal student loan forgiveness for eligible borrowers, plus an additional $10,000 for recipients of Pell Grants. To qualify for this relief, borrowers must have an individual income of less than $125,000 ($250,000 for married couples).

Additionally, the pause on federal student loan repayment and 0% interest that originally began during the COVID-19 pandemic has been extended until 60 days after the court challenges are resolved or 60 days after June 30, 2023, whichever date comes first.

When payments do restart, borrowers may also have access to a new avenue for reducing their monthly payments. According to the White House, the U.S. Department of Education is proposing a new income-driven repayment plan that will protect more low-income borrowers from having to make any payments, in addition to capping monthly payments for undergraduate loans at 5% of a borrower’s discretionary income.

Is Biden's Student Debt Relief Plan Legal?

So is Biden’s student debt cancellation plan legal? Based on the language of the HEROES Act, it would appear to be the case. However, this only holds up if the pandemic still constitutes a national emergency.

Although it would be hard to argue that the pandemic’s onset wasn’t a crisis—after all, the HEROES Act was used by former President Donald Trump to justify the original pause on student loan payments—opponents can argue that the pandemic is over.

On Sept. 18, 2022, Biden himself stated that “the pandemic is over” during an interview with “60 Minutes.” Dr. Anthony Fauci, the president’s chief medical adviser, later told The Atlantic that “[Biden] was saying we’re in a much better place with regard to the fulminant stage of the pandemic. It really becomes semantics and about how you want to spin it.”

Even if Biden’s plan can be considered legal, that doesn’t necessarily mean it will be considered constitutional. The Supreme Court will hear oral arguments on Feb. 28, 2023, and recent history suggests they may not rule in the president’s favor. Back in August 2021, SCOTUS blocked the Biden administration’s order extending the eviction moratorium, and it did the same for the president’s vaccine-or-test mandate in January 2022.

In July 2022, the Supreme Court also curbed the Environmental Protection Agency’s ability to regulate carbon emissions from power plants.

Opposition and Challenges to Biden’s Plan

It didn’t take long after the plan’s initial announcement for it to begin receiving criticism. Republicans in particular have argued that the plan is unfair to people in the U.S. who already repaid their debt or didn’t attend college, in addition to citing potential inflationary consequences.

The issue of legality, however, has been raised by critics across the political spectrum. The Biden administration may have been anticipating this concern, as on Aug. 23, 2022, the Education Department as well as the U.S. Department of Justice each released a memo stating student debt cancellation is “appropriate” under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003.

Several opponents of loan forgiveness are trying to challenge Biden's plan in court. The Job Creators Network issued a press release back on Aug. 24, 2022, stating the conservative advocacy organization is weighing legal options to block the administration’s student loan forgiveness policy.

In a September 2022 interview with Axios, Americans for Tax Reform President Grover Norquist said that "his organization will either file its own lawsuit, team up with conservative think tanks or state attorneys general, or all of the above.”

One of the litigants is Daniel Laschober, an Oregon homeowner who previously ran for the U.S. Senate. Representing himself in an Oregon district court, Laschober filed a complaint on Sept 12, 2022, for a temporary restraining order and preliminary injunction arguing that the HEROES Act doesn’t actually give Secretary of Education Miguel Cardona “the wide-ranging authority to discharge or forgive student loan debt on a mass or blanket basis.”

Additionally, Laschober’s claim posits that “financial harm to plaintiff resulting from the defendants’ plan to mass forgive student loans is foreseeable, quantifiable, irreparable, and...imminent” on the basis that the relief will result in worsening inflation and a higher interest rate on his mortgage.

Another challenge came from a coalition of Republican-led states, who claim that student debt relief would damage the revenues that state governments collect from student loan borrowers.

The Bottom Line

Even if Biden’s plan survives its legal challenges, the majority of student loan borrowers won’t be able to relax right away. If you aren’t one of the 8 million people on who the Department of Education already has income data, then you will need to submit an application to qualify for student loan cancellation before the end of 2023. Once you’ve filed this application, you should receive your student debt relief within four to six weeks.