US Supreme Court Hears Case With Potential to Annul $400 Billion in Student Loans

The US high court on Tuesday heard a pair of challenges to the Biden administration’s interpretation of the Higher Education Relief Opportunities for Students (HEROES) Act, a 2001 law, to relieve a sizable part of Americans’ massive student loan debt.

The challenges have been brought by a group of six Republican-led states represented by Nebraska Solicitor General James Campbell, and by two other challengers.

The HEROES Act became law in the wake of the September 11, 2001, terrorist attacks in the United States, as a way to ensure that federal student loan borrowers were not unfairly penalized by a nationwide emergency, such as a natural disaster, terrorist attack, or war. While both the Trump and Biden administrations successfully used the law to pause student loan payments during the COVID-19 pandemic, Biden has tried to go a step further and use the HEROES Act to forgive up to $20,000 per borrower.

The challengers argue that Congress in 2001 did not intend to give the US Department of Education the authority to do so.

Frustratingly for the White House, key members of the Democratic leadership have argued on the administration’s ability to do so as well, including then-House Speaker Nancy Pelosi (D-CA) in 2021.

However, last August, when the White House finally made its move, Pelosi came out in support, saying “we didn’t know what authority the President had to do this … and now clearly, it seems he has the authority.”

Student loans are accumulated by US college students who struggle to pay out of pocket for the massive cost of college education, which is almost completely privatized in the United States. More than 40 million Americans hold student loan debt, with 43% of debtors being over the age of 40. Altogether, Americans hold some $1.6 trillion in student loan debt.

Biden has sought to cancel up to $10,000 of that debt per person for people making less than $125,000 a year, or less than $250,000 for married couples. Those who received Pell Grants, a form of federal aid for lower-income students, could see up to $20,000 forgiven. The plan was estimated to eliminate roughly $400 billion in debt.

A federal appeals court ordered the program halted temporarily in October because of the Supreme Court challenge. By that time, 23 million Americans had applied for relief through the federal website.

A decision on the case is expected in June.