Nearly 1.2 million Pennsylvanians remain in limbo after the U.S. Supreme Court on Tuesday indicated they were deeply skeptical of the legality of the Biden administration’s student loan forgiveness plan that would eliminate more than $400 billion in federal student debt.
During more than three hours of arguments in two separate cases related to the plan, justices deliberated whether the administration has the power to cancel student debt. By the end, the court’s conservative majority seemed likely to rule against the plan, which would impact more than 26 million Americans — including nearly 80,000 in the Pittsburgh-region — who applied for loan relief last year.
“People rushed to apply,” Linda DeAngelo, an associate professor of higher education and a faculty fellow at the Center for Urban Education at the University of Pittsburgh, said. “The sentiment around the public is certainly that this type of relief seems warranted and needed.”
Come June, federal loan holders will no longer be in limbo. The court is expected to issue a ruling that month, and repayments — which have been paused since the pandemic — will resume June 30.
Local experts weren’t surprised by the court’s skepticism during the hearing, but they say the decision could impact families and loan holders for years to come.
“We’ll likely see some potential ripple effects for families … if loans aren’t forgiven as folks begin to be responsible for paying those loans back again,” Ms. DeAngelo said.
The plan, spurred by the administration because of the pandemic and its lingering effects, aims to filter thousands of dollars to federal loan holders based on factors including income.
It is based on the Higher Education Relief Opportunities for Students Act of 2003, also known as the HEROES Act, which allows the education secretary to waive regulations related to student loans during times of war or national emergency. It was used by the Trump and Biden administrations to pause federal student loan payments and interest during the pandemic.
But the way the debt forgiveness program is designed led to varying opinions among justices.
Liberal justices largely defended the Education Department’s right to forgive student loans as a result of the COVID-19 pandemic. They shed doubt on whether those who brought the lawsuits – one which was filed by six Republican-led states and another by two borrowers who did not receive the relief they wanted – are specifically harmed by the debt-relief program.
But the court’s conservative justices, who hold a 6-3 majority, were skeptical about Mr. Biden’s authority to grant debt relief, with questions centering around the fairness of a program that helps some borrowers but not others, The Washington Post reported.
Chief Justice John G. Roberts Jr. questioned what he called a “half-trillion dollar” program that could be implemented without more direct involvement from Congress, which controls federal spending. He added, “this is a case that presents extraordinarily serious, important issues about the role of Congress and about the role that we should exercise in scrutinizing that.”
The chief justice, along with the court’s conservative members, invoked the major questions doctrine, which requires that government initiatives with major political and economic consequences be authorized by Congress, according to The New York Times.
“It seems the conservative majority will use the major questions doctrine to strike down the Biden administration policy with regard to student loan forgiveness,” Bruce Ledewitz, a law professor at Duquesne University, said. “That’s just a guess of course from the oral argument but it seems pretty likely.”
Local impacts
While the case treads on questions of presidential power and whether plaintiffs have legal standing to challenge the plan, the heart of the question centers around whether the executive branch can funnel dollars to those with federal student debt.
Under the plan, individuals who are single and earn under $125,000 qualify for $10,000 in debt cancellation. Married couples who file taxes jointly qualify if their income is under $250,000. Those who received a federal Pell Grant and meet income requirements could receive a total of $20,000 in cancellation.
After the program was announced last year, Pennsylvanians joined millions of Americans in seeking relief. Of the almost 1.2 million state residents who applied to the program, 78,800 reside in Pittsburgh and much of Allegheny County, data from the U.S. Department of Education show.
An additional 73,500 applicants were from Beaver County and northwestern parts of Allegheny. To the south, Fayette, Greene, Indiana, Somerset, Washington and Westmoreland counties saw 61,300 applicants, data show.
Jamie Kosh, president of the Pennsylvania Association of Student Financial Aid Administrators, said he was “not shocked” by the Supreme Court discussions.
“I wish I would be but I knew this was going to be a long process,” Mr. Kosh said. “I think everybody in this knew this was going to be strung out for quite awhile.”
He noted that even if Mr. Biden’s plan was permitted to continue, students would still struggle because it would only cover a portion of their federal loan payments. The plan does not account for private loans.
“Once they go back into repayment students are going to struggle,” Mr. Kosh said. “It’s taking away some of their debt but not all of their debt for a lot of students.”
He added that many students aren’t able to save money to prepare for loan repayments while they are deferred because they have bills such as rent and utilities.
The forgiveness program is currently paused as it works through the courts. Applications are being held by the nation’s education department. Updates are available at studentaid.gov.
For Ms. DeAngelo, loan forgiveness would allow young Americans to “fully participate in society.”
“It’s part of that same argument here about the public benefit through these types of actions to benefit society and to benefit the national good and our economy,” she said.
First Published: March 1, 2023, 6:51 p.m.
Updated: March 2, 2023, 11:07 a.m.
