(The Center Square)
The US 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.
In August of last year, Biden announced that his administration would “forgive” $10,000 in federal student loan debt for up to $125,000 a year, or $250,000 for a married couple. Borrowers who borrowed money before July 1 can qualify.
For Pell Grant recipients, loan reductions total $20,000. The US Congressional Budget Office estimates the plan will cost taxpayers roughly $400 billion.
The Biden administration argued that the administration had the legal authority to cancel the debt. The justices pushed back on that right, asking whether Congress’s Heroes Act, which allowed the federal government to delay debt collection due to national emergencies, really gave it the power to cancel that debt.
Related: CBO says Biden plan to erase student loan debt set to cost taxpayers $400 billion
The justices point out that the law does not expressly permit student loan forgiveness in this way, but the Biden administration argued that student loan forgiveness still fits the intent of the bill.
The justices expressed concern that using a questionable legal argument to allow such a large release of federal funds could overstep the statute’s power. The Biden administration, however, argued that the legal challenge had no real injury because it would give them legal standing to challenge the plan in the first place.
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The Biden administration has paused student loan repayments until the Supreme Court rules on the case, in June and no later than July.
“Today, my administration will argue our case for student loan relief before the Supreme Court,” Biden said in a statement. “This relief is critical for 40 million Americans to recover from the financial crisis caused by the pandemic. We are confident it is legal. And we are fighting for it in court.
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A poll from August 2022 shows Americans are concerned that student loan debt forgiveness will increase inflation.
A CNBC/Momentive poll found that 59% of respondents said debt forgiveness would make inflation worse.
“Republicans are especially concerned: 81% of Republicans say student loan forgiveness will make inflation worse, with double the number of Democrats who say the same (41%),” Momentive said.
Syndicated with permission from The Center Square.