(Casey Harper, The Center Square) The U.S. Supreme Court heard oral arguments Tuesday in a legal challenge to President Joe Biden’s plan to cancel hundreds of billions of dollars in student loan debt.
Biden announced in August of last year that his administration would “forgive” $10,000 in federal student loan debt for those making less than $125,000 per year or $250,000 for married couples. Debtors who borrowed money before July 1 can qualify.
For Pell Grant recipients, the debt reduction would total $20,000. The U.S. Congressional Budget Office estimated that the plan would cost taxpayers roughly $400 billion.
The Biden administration argued that the administration has the legal authority to cancel the debt. Justices poked back at that claim, asking whether Congress’ HEROES ACT, which allowed the federal government to delay debt collection because of national emergencies, really grants power to cancel that debt.
Justices pointed out that the law does not explicitly allow for the waiving of student debt in this way, but the Biden administration argued that forgiving the student debt was still in line with the purpose of the bill.
The Biden administration has paused student loan repayment until the Supreme Court rules on this case, expected by June and no later than July.
“Today, my Administration argues our case for student debt relief in the Supreme Court,” Biden said in a statement. “This relief is critical to over 40 million Americans as they recover from the economic crisis caused by the pandemic. We’re confident it’s legal. And we’re fighting for it in court.”
A poll from August 2022 found Americans are concerned that forgiving the student loan debt will hike inflation.
A CNBC/Momentive survey found that 59% of those surveyed said they are concerned forgiving the debt will make inflation worse.
“Republicans are especially concerned: 81% of Republicans say student loan forgiveness will make inflation worse, nearly double the number of Democrats who say the same (41%),” Momentive said.