PAGThe resident Biden’s plan to forgive up to $20,000 in student loan debt was already in crisis, tied to legal challenges that have already reached the Supreme Court.
But the Administration’s announcement that it will end the COVID-19 national and public health emergencies on May 11 could spell its undoing, according to legal experts. The federal pause on student loan payments may also be in jeopardy.
At least 16 million Americans were approved for the program, but relief was halted by two separate federal court rulings, including one by a Texas judge who called the program an “unconstitutional” use of power.
Biden’s legal rationale for forgiving student debt was based on the HEROES Act, which allows the Department of Education to modify the provisions of student loan programs to alleviate the financial hardship borrowers might face during national emergencies.
The plan, announced in August, would affect 40 million Americans. It would forgive up to $10,000 of student loan debt for most borrowers, and up to $20,000 for those who went to college on Pell Grants. Only those who earn less than $125,000 per year are eligible.
In a November court filing, US Department of Education Assistant Secretary James Kvaal outlined the Administration’s argument, saying that unless the Administration is allowed to take action, there could be a “large increase in the number of federal student loan delinquencies and defaults as a result of the COVID-19 pandemic.”
But the Administration’s decision to end the public health emergency puts the crux of the Education Department’s argument at high risk, says Jed Shugerman, a professor who studies executive powers at Fordham Law School.
“It is possible that, following an emergency, you have a program to deal with the consequences of an emergency,” he says. “The problem is that the program is not tailor-made for the emergency.”
In order to have the authority to forgive student loans, the Department of Education agreed that it would have to show that the recipients of the program faced a significant financial burden as a result of COVID-19. While nearly 17 million Americans were unemployed at the height of the pandemic, workers in other industries, such as streaming services or video conferencing businesses like Zoom, thrived. Since borrowers were not required to provide evidence of a financial hardship when applying for student loan forgiveness, the Administration’s argument is flawed, Shugerman says.
“The only excuse for not really having any steps to show a causation or correlation of the emergency would be if the emergency was still happening,” he adds.
The Supreme Court will hear oral arguments on student loan relief at the end of February.
What is the future of student loan forgiveness?
Experts tell TIME the Supreme Court is increasingly likely to strike down Biden’s loan forgiveness plan in the coming weeks.
The best way forward would be to create a new plan that could be justified under the Higher Education Act of 1965, which was aimed at increasing access to college, Shugerman says.
Implementing a student loan forgiveness plan under that statute, while it would be a better fit, would take longer. But experts say Biden could still pass some relief for borrowers at the end of his term if the administration acts quickly.
Student loan payments likely to resume
Experts tell TIME that the student loan repayment pause could also run out as a result of Biden ending the COVID-19 emergency.
Student loan payments have stopped since March 2020. Payments resumed 60 days after the Department of Education was allowed to implement the student loan forgiveness program, or when litigation over the loan relief program ends Biden students.
“I don’t think it would be out of the question that if the case is settled after May, the cost-of-pay pause could be extended a little bit longer,” Luke Herrine, an assistant professor of law at the University of Alabama, tells TIME. “But the Biden Administration would have removed their justification for continuing to extend it well beyond what is needed to resolve the legal dispute.”
Other Steps to Forgive Student Loans
Meanwhile, the administration is already considering structural changes to student loan plans. In early January, the Department of Education announced proposed new regulations that could cut monthly payments in half for the 10 million borrowers enrolled in an income-driven repayment plan.
Those changes are not yet confirmed, but if the proposal goes into effect, black, Hispanic, American Indian and Alaska Native borrowers could see their lifetime payments per dollar borrowed reduced by 50%. An earlier initiative announced in April said the Department of Education would perform a one-time account adjustment that would expand borrowers’ payment histories to include credit for late and partial payments. Eligible borrowers would automatically see the adjustment on their account.
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