What to Expect When Student Debt Cancellation goes to Supreme Court

The Supreme Court will soon focus its attention on President Joe Biden’s plan for eradicating up to $20,000 of federal student debt for approximately 40 million eligible borrowers.

Two key lawsuits have been brought before the Supreme Court. They are aimed at preventing this temporary student debt relief from being put on hold. In the months ahead, the court will decide what happens to Biden’s plan.

Do not expect relief to come soon. This is what borrowers should know about the oral arguments, and why they should still plan for repayment.

• Nebraska v. Biden. A federal appeals court in Missouri stopped forgiveness rollout after six GOP states sued the Biden administration. They claimed that the debt cancellation would cause revenue loss to their states.

• Department of Education v. Brown. A federal judge in Texas declared this plan illegal. He alleged that the Education Department doesn’t have the power to cancel student debt via the legal route it uses.

Oral arguments play a significant role in court decisions, according to Frederick M. Lawrence, a distinguished lecturer from Georgetown University Law Center, Washington, D.C.

Arguments last approximately an hour and each side has 30 minutes to present their case. The justices will ask questions throughout.

Lawrence explains that “all nine justices will pose questions in order to determine seniority.” Lawrence explains that the nine justices will ask questions in order of seniority. Lawrence also explains that the parties will respond to those questions and will then have summarized their arguments. The case is then submitted fully to the court .”

Justices can base their questions upon publicly available documents, called “amicus shorts,” which are meant to inform and influence justices’ opinions. Numerous briefs have been submitted to the court by advocacy groups, think tanks and legal experts, as well as lawmakers.

Lawrence says that the justices will convene a conference behind closed doors a few days later to discuss the case and vote unofficially. The final opinion will be decided by a majority of the court, five justices.

On February 28, expect demonstrators. A rally will be held outside the court to support student debt cancellation. Oral arguments will take place inside.

Organisers expect hundreds of attendees along with politicians and speakers, according to Cody Hounanian, executive director at the SDCC.

Lawrence says that although we don’t know the final outcome, it is likely that justices will make a decision.

He said, “It’s very difficult to predict in advance.” “We don’t have much to learn from these justices on this specific issue .”

Although the questions justices ask during arguments can indicate their leanings, it is not always a good indicator. Lawrence explains that justices may ask specific questions to help fill in a gap in their understanding or to influence another justice.

Borrowers shouldn’t count on any relief before a decision has been made.

“It’s important to pay attention to the Supreme Court case but I also believe it’s a good idea not to base any action until we see a final ruling,” says Stacey MacPhetres. She is the senior director of college financing at Bright Horizons, an education and child care company.

Most likely, the final decision will be made in the summer.

Although the court does not have a set deadline for deciding cases, they usually decide at the end of their current term. Lawrence says that this could be as early as the last week of July or the end of June. Although decisions can sometimes be made earlier than expected, Lawrence states that this case is unlikely because it involves complicated federal power issues.

He says, “Typically, the ones that are decided quickly…are relatively simple.”

Borrowers won’t likely hear any news from the court between oral argument and the final decision announcement.

Biden’s relief program would be an “offramp” for struggling borrowers to avoid defaulting and to make monthly payments following three years of student loan bills paused. Persis Yu is deputy executive director at Student Borrower Protection Center. This non-profit student loan borrower advocacy group. Borrowers have more than $1.6 trillion of federal student loan debt.

Yu states, “I don’t know many people, certainly not any of my clients, who would claim that ‘all of sudden, I can make several hundred-dollar payment that I didn’t have to make the previous month,'” Yu adds. It’s an issue that affects older Americans, people with disabilities, communities of color, and low-income communities span>

The relief would be more beneficial to certain groups of borrower. Black women have more student debt than other groups and are at greatest risk if their cancellation is denied. The White House estimates that nearly 90% of relief would be granted to borrowers earning less than $75,000 annually. A recent Politico analysis revealed that two-thirds (or three quarters) of relief applications were from areas with incomes below $40,000.

The White House has already extended the pause (also known as forbearance) nine times. According to current guidance, payments will resume 60 days following the Supreme Court’s final ruling or 60 days following June 30, 2023, whichever comes first.

At that time, interest on student loan balances also starts accruing.

Don’t wait for the 60-day notice that will be sent to you based on Supreme Court’s final decision. Evaluate your financial situation right away.

“For those with a balance over cancellation, you need to prepare. MacPhetres states that you will be returning to loan repayments at some point. She advises that even though your balance may be totally wiped out, you can reduce your budget by the payment amount and then put it into a separate account. You can have an emergency savings cushion if [cancellation] is not granted.