The constitutionality of President Joe Biden’s student debt relief plan will be tested on Tuesday, when the U.S. Supreme Court hears oral arguments in the case of Biden v. Nebraska.
The president’s plan, announced in August, provides $20,000 in debt relief to Pell Grant recipients with loans held by the DOE, and up to $10,000 in debt relief to non-Pell Grant recipients, based on income. The Congressional Budget Office estimated the plan’s cost to be $400 billion.
The plan has faced several legal challenges, including one by six states claiming that they would be financially harmed by the plan in the form of lost tax revenue. This is the case that worked its way up to the high court. While the district court iniitally dismissed the case for lack of jurisdiction, the U.S. Court of Appeals for the 8th Circuit reversed, granting the six states's motion for an injunction pending appeal. In their brief, the six states argue that the plan is an abuse of executive authority that seeks “breathtaking and transformative power” by relying on “a tenuous and pretextual connection to a national emergency.”
“Other Americans will have to pick up the tab, to the tune of over $2,500 per taxpayer,” dozens of Republican senators wrote in an amicus brief.
In its filing, the Biden Administration argue that the actions taken by the secretary of education “fall comfortably within the plain text of the [HEROES] act,” a 2003 law that allows the education secretary to grant relief in times of national emergency, The New York Times reported.
The legal wrangles have prevented 26 million borrowers from obtaining relief from their outstanding loans. Despite the holdup, the Biden Administration announced its approval of more than 16 million student debt relief applications last month.
One of those on hold, 31-year-old Jason Doresky, a 2015 graduate of the University of Kansas, wants to know if he will have to return his $10,000 direct deposit from the Education Department. It was a refund for payments he had made voluntarily on his federal student loans since March 2020, when the government told borrowers that they could stop paying temporarily because of the pandemic.
“To the people making these decisions, $10,000 is not a lot of money,” he told the Times. “But when it’s a big part of your actual net worth or savings, it really matters.”
Black student loan borrowers typically leave school with $25,000 more in debt than white graduates, and carry the debt for years longer, the Times reported. That is one of the reasons why Desiree Veney, a senior at Morgan State University in Baltimore and the vice president of her campus chapter of the National Association for the Advancement of Colored People (NAACP). will join a rally outside the high court tomorrow.
The president’s plan “would help reduce the racial wealth gap,” she told the Times. “It would give not only me, but everyone, an opportunity to improve our financial security and lay a better foundation for upward economic mobility.”
Kristin McGuire, the executive director of Young Invincibles, a young-adult economic advocacy group that is helping to organize the rally, told the Times that she defaulted on her loans soon after she graduated in 2005, and saw it as a personal failing until she discovered commonality with others like her.
“What I realized is that this is an issue that’s impacting millions of people. It’s not an isolated incident,” she told the Times. “We’ve sat here and we’ve watched as corporations get bailed out and get debt canceled year after year, every time we have any sort of economic downturn. I really believe it’s time for the people to be able to access that type of benefit as well.”