Supreme Court Student Loan Forgiveness Hearing—Possible Outcomes Explained

The U.S. Supreme Court will hear oral arguments in a pair of cases on Tuesday challenging President Joe Biden's student debt forgiveness program, in what could be a major blow for the administration.

The nine justices will hear arguments in Biden v. Nebraska and Department of Education v. Brown, where challengers to the Biden administration's loan forgiveness program will ask the court to review whether the administration has overstepped its authority.

If the court rules against the administration in one or both cases, it would likely have a major impact on Biden's ability to fulfil his campaign promise to cancel at least $10,000 in student debt per borrower.

The president's plan promises to wipe out $10,000 in federal student debt for those with incomes of less than $125,000, or households earning less than $250,000, while Pell Grant recipients, who typically have greater financial need, are eligible for an additional $10,000 in relief.

Student Loan Protesters Washington DC.
Student loan borrowers gather near the White House to tell President Joe Biden to cancel student debt in May 2020 in Washington, D.C. Paul Morigi/Getty

The Court now has a 6-3 conservative majority and the administration has seen a number of unfavorable decisions from the court, including on immigration policy and vaccine mandates.

Biden v. Nebraska

In Biden v. Nebraska, six Republican-led states—Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina—have alleged that the Biden administration is exceeding its authority with the student loan forgiveness program.

They also say the administration is threatening the revenue of state bodies that profit from federal student loans.

The Supreme Court may dismiss this case if it finds that states lack standing to bring the suit. A lower court found they did lack standing but the U.S. Court of Appeals for the 8th Circuit later ruled that Missouri could bring the suit on behalf of the Missouri Higher Education Loan Authority, which owns and services federal student loan debt in the state.

In this case, the Supreme Court may call upon the so-called "major questions doctrine," which posits that when a federal agency takes a decision of vast "economic and political significance," federal legislation should authorize the agency to do so, as the court said in a 2014 ruling.

The conservative legal doctrine is unlikely to find support among the court's three liberals but if at least five of the conservative justices find the student debt relief program violates the major questions doctrine, they are likely to strike down the program.

The Biden administration is arguing that its actions are authorized by federal legislation in the former of the HEROES Act of 2003, also known as the Higher Education Relief Opportunities for Students Act, which gives the secretary of education the authority to waive or change student loan obligations in times of national emergency.

The U.S. has been under an emergency declaration due to the COVID-19 pandemic since March 2020, and the court may determine whether the HEROES Act permits the debt forgiveness program.

It's possible a majority of the justices could agree with the administration's interpretation of the HEROES Act, and allow the debt forgiveness program to stand on that basis. On the other hand, the majority could find that the administration is incorrectly applying the law and strike it down.

Department of Education v. Brown

In the other case, Department of Education v. Brown, conservative advocacy group the Job Creators Network Foundation is bringing the suit on behalf of two student borrowers who don't fully qualify for the student debt relief program.

That case argues that the Biden administration erred when it failed to complete the notice and comment process before the student loan forgiveness program began.

However, that case may be less of a threat to the program as the HEROES Act exempts the secretary of education's authority to forgive student loans from that process.

Nonetheless, the future of Biden's student debt forgiveness program remains in doubt until the court rules on both cases, while it's still possible further legal challenges could be brought forward.

It's not possible to predict when the court might issue its rulings, though the administration may have to wait until the end of the court's term in June for the final opinions.

If the court rules that the Biden administration does not have the authority to implement student loan forgiveness in the way it has planned, the ruling could scupper Biden's efforts to implement debt cancelation without a specific act of Congress.

However, if the Biden administration prevails before the Supreme Court, opponents of the student loan forgiveness program may have little recourse as the administration will be able to continue the program.