Student Loan Forgiveness: Whether Biden Extends Payment Pause Again May Depend On Supreme Court Ruling


Millions of student loan borrowers are currently in limbo while they wait for a Supreme Court decision on President Joe Biden’s unprecedented student loan forgiveness initiative. In the meantime, the ongoing student loan pause remains in effect after Biden extended the moratorium in direct response to the Supreme Court legal battle.

That latest extension is set to end by this summer, when the Supreme Court is set to rule on the loan forgiveness program. But whether Biden extends the pause yet again may ultimately depend on the court’s decision.

Biden Extended The Student Loan Pause Until Supreme Court Rules On Student Loan Forgiveness

Payments on most federal student loans have been suspended since March 2020 in response to the Covid-19 pandemic. The pause has also frozen interest on government-held federal student loans and stopped collections efforts against defaulted borrowers.

President Trump first enacted the student loan pause using executive authority. Congress then codified the pause for six months via passage of the CARES Act. President Trump, and then President Biden, subsequently extended the pause multiple times using authority granted by the HEROES Act of 2003, which gives the executive branch broad flexibility to modify and waive federal student loan programs and obligations in response to a national emergency.

President Biden had anticipated the pause ending last December, just a few months after he announced his sweeping student loan forgiveness initiative. Under that plan, up to 40 million borrowers could receive up to $20,000 in federal student loan forgiveness if they earned income below allowable limits. The Biden administration again relied on the HEROES Act to authorize this broad student debt relief, arguing that mass debt cancellation was critical to ensuring that borrowers would not default or be left in a worse financial position once payments resume.

But before any borrowers could receive any relief, federal courts blocked the program in response to legal challenges. Two of those challenges are now before the Supreme Court. Biden announced another extension of the student loan pause in direct response to this legal battle. The latest extension will end 60 days after either June 30, 2023 or the date of a Supreme Court decision on the student loan forgiveness plan (which is expected in June, as well).

Supreme Court Ruling On Student Loan Forgiveness May Determine Whether Student Loan Pause Will Be Extended Again

The Biden administation had planned on restarting student loan payments this January while simultaneously implementing the student loan forgiveness initiative. More than half of eligible borrowers could see most or all of their loan balances eliminated under Biden’s plan, reducing the threat of widespread defaults. Some administration officials had also argued that restarting payments was an important inflationary counterbalance to enacting broad student debt relief.

If the Supreme Court rules in favor of the Biden administration, payments would likely resume as originally planned. But if the Supreme Court rules against the administration and strikes down the student loan forgiveness initiative, Biden may push to extend the student loan pause beyond this summer.

It is unclear how the Supreme Court will ultimately rule. While a majority of justices on the court expressed skepticism about the legality of the Biden’s plan, the case could ultimately turn on the issue of standing — whether the parties challenging the program can demonstrate a sufficiently concrete injury directly tied to the initiative that would provide grounds for suing in the first place. During last month’s hearing, several justices seemed highly skeptical that the challengers had standing, while a few more justices said little or nothing at all about that issue.


Biden May Face Challenges In Extending The Student Loan Pause Again

If the Supreme Court does strike down Biden’s student loan forgiveness plan, there may be hurdles if Biden wants to extend the moratorium again.

While there appeared to be broad agreement during last month’s Supreme Court hearing that the HEROES Act does confer authority on the Education Department to pause payments in response to a national emergency, there was disagreement about how far an administration could go, and how long such relief could last. The challengers suggested that at some point, ongoing extensions of the pause would be too far removed from the requisite national emergency to be valid.

Importantly, the Biden administration has also announced that it plans on ending the Covid national emergency this May. Doing so could remove the central justification for the student loan pause, making it more difficult for the administration to extend it again.

In addition, a major student loan company just filed a lawsuit against the Biden administration seeking to strike down the latest extension of the student loan pause. The lawsuit argues that the extension is illegal because it was tied to the Supreme Court legal battle, not to the Covid national emergency. While this lawsuit may face hurdles as well, an adverse ruling could complicate the administration’s efforts to extend the pause further.

The Biden administration would likely argue that the current extension is legal because the payment pause and Biden’s student loan forgiveness initiative are directly linked to each other and, ultimately, to the Covid national emergency. The debt relief under Biden’s student loan forgiveness initiative was designed to mitigate the effects of returning to repayment, all in an effort to ensure that borrowers are not financially worse off than they were prior to the pandemic. The administration argued before the Supreme Court that HEROES Act authority can, to some extent, extend beyond the immediate end of a national emergency if it is designed to remedy financial harm linked to that emergency.

Ultimately, if the Supreme Court rules against the Biden administration on student loan forgiveness, and Biden extends the student loan pause yet again, borrowers may have to settle in for yet another lengthy court battle and additional months of uncertainty.

Further Student Loan Forgiveness Reading

These 6 Student Loan Forgiveness Avenues Are Not Blocked By The Supreme Court

4 Student Loan Forgiveness Updates After Supreme Court Hearing

Student Loan Forgiveness: 6 Big Takeaways From Landmark Supreme Court Hearing

What Happens If The Supreme Court Strikes Down Biden’s Student Loan Forgiveness Plan?


Leave a Reply

Your email address will not be published.