The Supreme Court Leaves Millions of Americans in Limbo Awaiting Student Loan Debt Forgiveness
Student demonstrators in Washington, D.C. the day after President Biden announced his plans for student-debt forgiveness in August of 2022. Source for photo: CNBC
Many college graduates leave their universities with so much more than just a degree as they embark on their future. Colleges give their students new experiences away from home, friends who love unconditionally, memories to last a lifetime, and, in many cases, crippling debt. A monthly student loan payment will bring back memories of their college career for almost 43.8 million Americans each month. Graduates put their college degrees to use not only to change the world in their respective fields, but to make a high enough salary to pay off their federal loan debt balance, which is almost $40,000 for the average American.
March of 2020 provided student borrowers some relief because the pandemic brought a pause on federal student loan payments. The pause was then extended by the newly inaugurated Biden administration in January 2021. President Biden then went a step further in August 2022 by announcing a three-part plan to erase student loan debt for borrowers who need it the most. In the announcement of his plan, Biden asserted that “[he] believes that a post-high school education should be a ticket to a middle-class life, but for too many, the cost of borrowing for college is a lifelong burden that deprives them of that opportunity.” The intricacies of the plan included forgiving up to $20,000 for Pell Grant recipients and up to $10,000 for non Pell Grant recipients. To qualify for this plan, an individual’s income must be less than $125,000 or less than $250,000 for married couples. The White House predicted that this aspect of the plan would completely erase the balance of almost 20 million borrowers and make positive steps towards narrowing the racial wealth gap.
Many University of North Carolina Chapel Hill students described being elated when hearing about Biden’s plan. Eden Curtiss, a junior at the university, said that possibly qualifying for debt forgiveness lessened her anxiety about moving forward in her academic career. “Since I’m hopefully going to law school after graduation, it would be great to go into that experience not having to think about making monthly payments on my loans or how much interest is piling up while I’m trying to earn a new degree,” Curtiss said. A sophomore at UNC who wished to remain anonymous described how the plan would help their unique financial circumstance. “Even though it looks like my parents make a lot of money on paper, they aren’t helping me with paying for school so I’ve had to take out a ton of loans… forgiveness for the loans is something I really need,” they said. Another student, Solomon Lowry, who will graduate in December 2023, described immediately wanting to find out how to apply. “As soon as I heard about it [Biden’s plan for student loan forgiveness], I wanted to get my application in. Not having to think about my student loans on top of preparing to enter the workforce and essentially become an adult in less than a year has made that process so much less stressful,” Lowry expressed.
When the application for debt forgiveness opened, 26 million borrowers applied and began anxiously waiting to see if their debt would be forgiven. However, the wait will have to continue. After its enactment, the program was legally challenged by two different groups – the Job Creators Network Foundation, and a coalition of six GOP-led states: Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina. The legal challenges quickly brought the Biden administration before the United States Supreme Court to defend their debt forgiveness plan. Before oral arguments began, many legal scholars predicted a rough trial ending with heartbreak for many Americans in desperate need of erasure for their student loan debts. However, after witnessing Solicitor General Elizabeth Prelogar’s legal expertise in action before the highest court, many have deemed her as the possible savior of student debt forgiveness.
Regardless of Solicitor General Prelogar’s initial prowess in the courtroom, the Justices have yet to announce a decision on the case. Until a decision is announced, the 26 million Americans who applied for loan debt will be left in limbo, nervously awaiting a decision. A ruling against President Biden’s plan, however, doesn’t necessarily mean defeat for those who want their debt balance erased. There are a variety of ways the Biden administration can, and likely will, attempt to still provide debt relief if their initial plan is blocked by the court system. If blocked, The White House could continue to provide extensions on the pausal of monthly loan payments, work to lessen the interest on student loans, and revise the current repayment system, all of which would have a similar effect of helping borrowers of student loans. With a large support base in favor of forgiveness and a possible bid for reelection quickly approaching, President Biden’s administration is not likely to simply accept defeat on behalf of so many Americans wanting student loan debt relief.