SEEKING FORGIVENESS — The Supreme Court is set to hear arguments Tuesday about the legality of President Joe Biden’s $400 billion student debt relief program. After its unveiling in August, the program that would provide up to $10,000 in loan forgiveness for most borrowers and $20,000 for Pell Grant recipients quickly generated a lawsuit from six Republican-led states, led by Nebraska and Missouri. While the administration justified the program’s implementation by pointing to the economic hardships brought on by the Covid-19 pandemic, Republican officials and conservative groups claimed it was an abuse of executive power. Nightly’s Katherine Long spoke with Michael Stratford, an education reporter for POLITICO Pro, on what this decision means for tens of millions of borrowers and the legal precedent it will set for federal student loan forgiveness. Can you give us a sense of the scale of this case? How many borrowers are affected? How much money is at stake? Most cases at the Supreme Court are necessarily high stakes, but we can put a pretty eye-catching dollar figure on this one: Roughly $400 billion of student debt relief is hanging in the balance for more than 40 million Americans. More than 25 million applications flooded into the Education Department last fall. Some 16 million were approved before the Biden administration was forced to shut down the program in response to court orders. What legal questions are at issue here? There are a few. The first is whether the six Republican-led states and two Texas student loan borrowers challenging the debt relief program are allowed to sue at all. How will they actually be harmed by debt relief? Missouri has been the focus of a lot of attention in that regard. The state claims it’ll be injured because it may get less money from the Missouri Higher Education Loan Authority, a state-created entity, which will have fewer loans to collect if Biden cancels them. If no party has standing, the case is over and Biden wins. (And many experts think that’s the administration’s best bet for survival.) Otherwise, the justices will turn to the merits of the case, which hinges on the interpretation of a 2003 law known as the HEROES Act. The law says that the secretary of education is allowed to “waive or modify” the normal rules related to federal student loans to prevent borrowers from being “placed in a worse position financially” because of a national emergency. Covid-19 is such an emergency, the administration contends. And it says that canceling debt for most borrowers will help avoid a surge of delinquencies and defaults when payments resume for the first time since the pandemic began. Do we have any indication of where the court stands on any of the questions or issues at stake in this case? That’s always a tough guessing-game to play. But what we know is that the conservative majority on this court has been hostile to Biden’s other pandemic-related emergency actions. It rejected Biden’s workplace Covid vaccine rule and his extension of the eviction moratorium. And, more broadly, the Republican appointees have been deeply skeptical of the administrative powers of federal agencies. They struck down an EPA climate policy last year with a blueprint for reining in other agency actions. One difference — and who knows if it will matter here — is that in all of those cases, the court was balancing a government action against strong business interests: landlords, employers, and other companies. Here we’re talking about the government doling out benefits to student loan borrowers. To be sure, conservatives and many taxpayers might be ideologically opposed to the Biden administration doing that. But there’s no major industry or business interest lining up outside the court to fight it. What happens if the court rules against debt relief? Politically, the Biden administration will blame, as it already has, Republican opponents of its plan for suing to block student debt relief to millions. Practically-speaking, the administration is going to have to make a range of decisions about how, if at all, it’s going to collect loan payments from millions of borrowers to whom it promised relief. Right now, the Biden administration is preparing to resume collecting monthly payments from most federal student loan borrowers in September (for the first time since March 2020). But that could change. What does the outcome of this case mean for Biden’s presidency? If the court halts the program, what are his other options for tackling student debt? The stakes are high not just for borrowers but for Biden as well. Many Democrats, including Biden himself, have suggested that mass student debt relief helped Democrats turn out voters last fall. And now that progressives convinced Biden to act on mass debt cancellation, it seems impossible to un-ring that bell. Expect Biden in the coming months to face pressure from within his own party to come up with a fallback plan to deliver on student debt relief. Progressives are eyeing using a separate legal authority in the Higher Education Act — known as compromise and settle — which is not tied to the pandemic national emergency. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at klong@politico.com or on Twitter at @katherinealong.
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