Legal challenges impede President Biden’s student debt relief
Yahoo Finance's Jennifer Schonberger joins the Live show to discuss the legal challenges that are impeding The Biden-Harris Administration’s Student Debt Relief Plan from moving forward.
RACHELLE AKUFFO: Well, sticking with politics, we're focusing in on the latest efforts towards Biden's plan to cancel billions in federal student loans. We have Yahoo Finance's Jennifer Schonberger here with the details. Jennifer, a lot of back and forth on this. Where do things stand now?
JENNIFER SCHONBERGER: Good morning to you. A lot of back and forth on this outside of the speaker race. The Justice Department filing a brief late Wednesday with the Supreme Court defending President Joe Biden's plan to cancel billions of dollars in federal student debt. The filing marks the beginning of a high stakes battle, where the conservative-led high court will hear oral arguments in February in two cases challenging the student debt relief program which provides up to $20,000 of loan forgiveness for millions of borrowers.
The Biden administration is defending its policy after two parties are challenging it. One case is a lawsuit by six Republican-led states led by Nebraska and Missouri. The second was brought by two Texas student loan borrowers who were partially or fully excluded from the program.
Now, the administration argues the Supreme Court should toss out the case because Republican states and Texas borrowers lack legal standing to bring the case. The Justice Department also argues Education Secretary Miguel Cardona had clear authority to bring-- to provide debt relief to borrowers under the Higher Education Relief Opportunities Act, which gives the education department the power to waive the laws that typically govern federal student loans during national emergencies.
The filing notes that, quote, "Ending that pause without providing some additional relief for lower-income borrowers would cause delinquency and default rates to spike above prepandemic levels. This court should not compel that damaging and destabilizing result."
Now, the cost of a public four year college has rocketed nearly 160% in the past 30 years. Some numbers here from the Fed and the College Board noting that each borrower, on average, owes nearly $30,000. And 55% of students from public four-year institutions had federal student loans.
Federal student loan payments have been paused since March 2020, with the majority of those in forbearance now. Rachelle?
AKIKO FUJITA: So Jen, let's pick up on that point. I mean, what happens if, in fact, the Biden administration loses this Supreme Court case? What happens to the payment pause? Because the restart date hasn't really been determined yet.
JENNIFER SCHONBERGER: Right, exactly. That's been held up in lower courts, which the Biden administration is trying to defend their point, saying that we're going to see a lot of destabilizing effects there. And if-- remember, this is a Supreme Court that has led six-three by conservatives.
So there may be a bias towards some of these more conservative held views led by the Republican-led states, led by Texas. And so there is a very real risk that this could be turned over. We'll see how things play out. We won't probably get a decision from the oral arguments which are due in February until June. So we'll probably be in a holding pattern here for the first half of this year.
AKIKO FUJITA: Yeah, no question, a lot at stake with that Supreme Court case. Jen Schonberger, thanks so much for bringing us that story.