Supreme Court Rejection of School’s Student-Debt Appeal Signals Hope for Biden’s Relief Plan

The US Supreme Court rejected an appeal by three schools to put a hold on $6 billion in debt relief for 200,000 student-loan borrowers.

Supreme Court’s decision on Biden’s student loan forgiveness. (Photo: NPR)

Supreme Court Rejects Appeal to Halt Student-Debt Relief

The Education Department agreed to the settlement last summer to resolve a lawsuit filed by borrowers whose borrower-defense claims had been stalled under former President Donald Trump, according to a published article in BUSINESS INSIDER.

The schools named in the settlement argued in an appeal that they were not given due process to respond to the claims and they wanted the Supreme Court to place a stay on the relief as the appeals process plays out.

The court’s rejection allows the relief to move forward, indicating that at least five of the justices disagreed with the schools’ claim that Biden cannot cancel student debt under the Higher Education Act.

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Biden’s Authority Under the HEA

The schools in the borrower-defense appeal targeted the Higher Education Act, which allows the Education secretary to approve borrower-defense claims under the provision in the law that provides the secretary the authority to “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand” related to student loans.

They said if the Supreme Court strikes down Biden’s broad debt relief, “the Secretary could turn around and cancel the same debts under his claimed HEA authority.” The move by the court to deny the schools’ appeal could signal that the justices would look favorably on Biden’s authority under the HEA. That could mean that the Supreme Court would accept broader relief using that law, even if they strike down the current plan based on the HEROES Act.

The Higher Education Act could be another way to get relief to millions of borrowers, as it gives the Education secretary the ability to modify or waive student-loan balances in connection with a national emergency, like COVID-19. Legal experts at Harvard Law School wrote in a memo that the “Secretary has the authority to modify a loan to zero, and exercises this authority even in the absence of any implementing regulations.”

READ ALSO: Colleges Ask Supreme Court To Cancel Federal Student Loans Worth $6 Billion