Supreme Court again refuses to block Biden’s student loan relief plan

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Amy Coney Barrett, Supreme Court nominee and United States Court of Appeals judge, on Capitol Hill in Washington, October 21, 2020.

Ken Cedeno | Reuters

The Supreme Court on Friday denied a second request to block the Biden administration’s student loan debt relief program.

Judge Amy Coney Barrett denied an emergency request to block the program made Tuesday by the Pacific Legal Foundation, a conservative legal group, on behalf of two borrowers in Indiana.

On October 20, Barrett denied a similar request from the Brown County Taxpayers Association in Wisconsin.

Barrett is responsible for these claims arising from cases brought before the 7th US Circuit Court of Appeals, which includes Indiana and Wisconsin.

Friday’s decision has little practical effect. For now, student loan forgiveness remains pending a challenge from six Republican-led states. An 8th Circuit Court of Appeals judge in October granted the states’ emergency motion to suspend the plan pending consideration of the states’ appeal.

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26 million borrowers applied for student loan forgiveness

Since the White House unveiled its plan in August — to forgive $10,000 in student loans for most borrowers and up to $20,000 for those who received Pell Grants for low-income families — it has faces at least six lawsuits.

Nearly 26 million Americans have already applied for student loan forgiveness, and the Biden administration has approved 16 million of those applications, the White House announced Thursday. The administration has continued to encourage borrowers to seek relief despite recent challenges.

Caleb Kruckenberg, attorney at the Pacific Legal Foundation, said in an emailed statement: “We are disappointed with today’s denial, but we will continue to fight this program in court.”

“Virtually since this program was announced, the administration has sought to avoid judicial review,” Kruckenberg said. “So far they’ve been successful. But that doesn’t change the fact that this program is illegal through and through.”

“Stand up” remains an issue for forgiveness challenges

Experts say the main hurdle for those hoping to thwart the president’s action has been finding a plaintiff who can prove he was wronged by the policy.

“Such an injury is necessary to establish what the courts call ‘standing,'” Harvard law professor Laurence Tribe told CNBC recently. “No individual, company or state is manifestly harmed as private lenders would have been if, for example, their student loans had been cancelled.”

With that in mind, Barrett’s decision to reject the Pacific Legal Foundation’s application is not surprising, said higher education expert Mark Kantrowitz.

“There were very few substantive differences between their original trial and the retrial, signifying a lack of legal status,” he said.

In the Pacific Legal Foundation case, Indiana-based plaintiffs Frank Garrison and Noel Johnson said they would suffer financial harm if some of their student debt was automatically forgiven because they would incur state taxes. on this canceled debt.

Indiana is one of several states that said the rebate would be taxable at the state level, and potentially at the county level.

Garrison and Johnson are both lawyers; Garrison works for the Pacific Legal Foundation and Johnson for the Public Interest Legal Foundation. They are seeking relief through the Civil Service Loan Forgiveness Program, which allows those who work for the government or specific non-profit organizations to get their debt forgiven after 10 years or 120 payments. The rebate of the PSLF is not considered taxable income.

After the initial lawsuit, the Department of Education said borrowers could opt out if they did not want their loans cancelled.

Student borrowers “in limbo”

As legal challenges mount, financial advisers say borrowers are wondering where student loan forgiveness stands.

“Court interference is really troubling because people are looking for certainty about what’s going on with their student loans,” said Ethan Miller, Certified Financial Planner and founder of Planning for Progress in the Washington, DC area. Miller specializes in clients with student loans.

“There was a plan that clearly outlined the steps,” he said. “And yet everyone was put in limbo.”

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