The Supreme Court will hear Biden's student-loan forgiveness case in February. Here's what that means for millions of borrowers waiting for relief.

Supreme Court
The Supreme Court Building in Washington, DC.AP Photo/Patrick Semansky
  • The Supreme Court agreed to hear oral arguments on Biden's student-debt relief in February.

  • Still, student-loan forgiveness will stay blocked as the legal battles play out.

  • Borrowers remain in limbo on relief, but did receive another extension of the payment pause.

There's good news and bad news up ahead for student-loan borrowers.

The good news is that President Joe Biden's debt relief isn't dead in the water — the Supreme Court agreed to hear arguments to the case early next year. In the meantime, payments won't resume on January 1 as previously planned.

The bad news is that until then, loan forgiveness will remain blocked.

In November, two conservative-backed lawsuits succeeded in halting the implementation of Biden's plan to forgive up to $20,000 in student debt for federal borrowers making under $125,000 a year. On November 14, the 8th Circuit Court of Appeals ruled that the temporary pause it placed on the debt relief would remain in place indefinitely, favoring the six Republican-led states who filed a lawsuit that argued relief would hurt their states' tax revenues.

A separate decision from a federal court in Texas also blocked Biden's debt relief on November 10, and the 5th Circuit Court of Appeals on Wednesday rejected the Biden administration's request to pause that ruling and allow the relief to move forward.

However, following the 8th Circuit's ruling, Biden's administration took matters to the Supreme Court and asked it to revive student-loan forgiveness as the legal proceedings play out. On Thursday, the nation's highest court responded: It will not allow the relief to progress right now, but it will hear oral arguments to the case in February.

"We welcome the Supreme Court's decision to hear the case on our student debt relief plan for middle and working class borrowers this February," White House Press Secretary Karine Jean-Pierre said in a Thursday statement.

"This program is necessary to help over 40 million eligible Americans struggling under the burden of student loan debt recover from the pandemic and move forward with their lives," she continued. "The program is also legal, supported by careful analysis from administration lawyers.  President Biden will keep fighting against efforts to rob middle class families of the relief they need and deserve."

What comes next for student-loan borrowers

Since October, student-loan forgiveness has been on pause. While the Education Department has recently started notifying some of the 26 million borrowers who already applied for relief that they had been approved, student-loan servicers have been blocked from actually discharging any student loans. Borrowers who have not yet submitted applications currently do not have the option to apply.

In response to the legal challenges, Biden extended the pause on student-loan payments until June 30, 2023, or until the lawsuits are resolved, whichever comes first. This means federal borrowers do not have to worry about restarting payments after December 31, when they were previously scheduled to resume.

In the meantime, all eyes are on the Supreme Court. According to its decision, it will hear oral arguments in February and will address two questions to the case: Whether the Republican-led states that filed the lawsuit have standing, and whether Biden's plan to cancel student debt exceeds the Education Secretary's authority or is "arbitrary and capricious."

While the Supreme Court has just responded to the 8th Circuit decision, Biden's administration also asked the Court to intervene in the 5th Circuit decision that blocked the relief on Friday evening, so it's possible both cases will be combined.

The issue of standing has long been the focus of not only this specific lawsuit, but the other conservative lawsuits that have sought to block debt relief. But as Politico noted, this would be the first time a court is examining whether Biden's debt relief is arbitrary, in which the loan forgiveness would be found to not be in accordance with the law and demonstrates an "abuse of discretion," per the Administrative Procedures Act.

Republican lawmakers have continued to argue that Biden is overstepping authority granted under the HEROES Act of 2003, which is the law the Education Secretary is using to cancel student debt. But some advocates and experts have recently expressed support of that authority through a series of amicus curiae briefs, and the administration has not publicly suggested concerns with the legal route it chose to take.

"Our student debt relief program is necessary to help 40M eligible Americans struggling under the burden of student loan debt recover from the pandemic," Education Secretary Miguel Cardona wrote on Twitter. "That's 40M borrowers who chased the American dream through higher education. I look forward to SCOTUS hearing our case."

Read the original article on Business Insider