“It would be an absolute disaster” to resume student-loan repayment this fall – if the Supreme Court rules against the Biden administration’s plan to cancel up to $20,000 in the debt, an expert in borrower assistance said.
Student loan borrowers, advocates and other stakeholders have been waiting for months for the Supreme Court to rule on the legality of the Biden administration’s student-debt relief plan.
In one case before the court, six Republican-led states sued the Biden administration over the plan. The other suit was brought by two student-loan borrowers, one of whom isn’t eligible for the plan and the other who only qualifies for up to $10,000 in relief. Their suit is backed by the Job Creators Network, an advocacy organization founded by Bernard Marcus, the co-founder of Home Depot and a backer of former President Trump.
The states’ claim to standing centers in large part on the The Higher Education Loan Authority of Missouri or MOHELA, a student-loan organization created by Missouri’s state legislature. The states have said that the debt-relief plan could impact MOHELA’s bottom line by decreasing the volume of loans the organization services on behalf of the federal government. The states have said that the hit to MOHELA would impact Missouri’s revenue.
The idea of student-debt cancellation became mainstream during the 2020 presidential election, when multiple candidates for the Democratic nomination, including Biden, said they would discharge at least some student debt if elected.Regardless of the outcome of the case, payments, interest and collections on federal student loans will resume this fall.
“My hope and I think the hope of many people who have looked at these student issues is that there will be renewed energy and focus on addressing that front end issue if this cancellation program goes through,” Shafroth said.
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