Tuesday, February 7, 2023
Feb. 7, 2023

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Biden administration to ask high court to take up student debt plan

Loan payments scheduled to restart in January

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WASHINGTON — The Biden administration plans to ask the Supreme Court to reinstate the president’s student debt cancellation plan, according to a Thursday legal filing warning that Americans will face financial strain if the plan remains stalled in court when loan payments are scheduled to restart in January.

The Justice Department is fighting to keep Biden’s plan alive after it was halted by two federal courts in recent weeks. The agency is asking for quick action to block both rulings and allow the plan to take effect even as it plays out in the nation’s courts.

In a legal filing Thursday, the administration announced plans to appeal one of those rulings, by a federal appeals court in St. Louis, to the nation’s highest court. And it says it’s prepared to appeal the other case if needed.

The White House has said it will prevail, but even some supporters of the plan worry about its chances before a conservative Supreme Court that has scaled back Biden’s authority in other ways, including in a June decision curbing the Environmental Protection Agency’s ability to limit power plan emissions.

Biden’s plan promises $10,000 in federal student debt forgiveness to those with incomes of less than $125,000, or households earning less than $250,000. Pell Grant recipients, who typically demonstrate more financial need, are eligible for an additional $10,000 in relief.

Keeping the debt relief on hold would leave the government with an “unnecessarily perilous choice,” the administration argued in its filing. If it restarts student loan payments as planned on Jan. 1, millions of Americans will get billed for debt that was promised to be canceled. But if the government extends the payment pause, it will cost billions of dollars in lost revenue.

It builds on arguments the administration made in other filings this week, warning that many Americans won’t be able to pay their student debt bills in January if the cancellation plan remains halted.

For typical borrowers, monthly payments would be $200 to $300 higher than they would be if Biden’s plan goes through, the Education Department said. The strain could lead to soaring default rates, which have increased by an average of twentyfold in the wake of other natural disasters.

“We anticipate there could be an historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic,” Education Undersecretary James Kvaal said in a Tuesday filing. “This could result in one of the harms that the one-time student loan debt relief program was intended to avoid.”

In its latest filing, the Justice Department asks an appeals court to lift a decision from U.S. District Court Judge Mark Pittman striking down Biden’s plan. Pittman, who was appointed by former President Donald Trump, ruled last week that Biden’s plan oversteps his authority and usurps Congress’ powers to make laws.

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